Minutes of the Board of Regents of Stephen F. Austin State University. 2008, Volume No. 242

Stephen F. Austin
State University
Minutes of the
Board of Regents
Nacogdoches, Texas
February 7,2008
Volume 242
BOARD MINUTES FOR FEBRUARY 7,2008
VOLUME 241
Board Order 08-15 Approval of Resolution Authorizing the Sale of the Texas
Public Finance Authority Stephen F. Austin State University
Tuition Revenue Bonds, Series 2008, in the Aggregate
Principal Amount of $20,175,000 for the Early Childhood
Research Development Center 2
Appendix Certificate of Resolution
Stephen F. Austin State University
Minutes of the Telephone Meeting
Board of Regents
Nacogdoches, Texas
February 7, 2008
Austin Building 307
A special teleconference meeting of the board of regents was called to order on Thursday,
February 7, 2008, at 1:00 p.m. by Chair Valerie Ertz.
Joining the meeting by telephone were:
Board Members: Ms. Valerie Ertz, Chair
Mr. Carlos Amaral
Mr. Richard Boyer
Mr. James Dickerson
Mr. Bob Garrett
Mr. Joe Max Green
Mr. Paul Pond
Mr. James Thompson
Mr. Melvin White
President: Dr. Baker Pattillo
Present in Austin Building, Room 307 were:
Vice President: Mr. Danny Gallant
General Counsel: Ms. Yvette Clark
Others SFA administrators, staff, and visitors
Danny Gallant introduced others joining by telephone: Kim Edwards, executive director,
and Judith Porras, general counsel, of the Texas Public Finance Authority; Tim Peterson,
representing First Southwest, financial advisor; and Lisa Adelman of Fulbright and
Jaworski, bond counsel. Kim Edwards explained that the bonds had been sold that
morning through a competitive bond opening. There were 12 bids; the winning bid had
been from Southwest Securities for 4.099632%. She congratulated the university staff for
the excellent job they had done in the conference call with the bond rating agencies. The
bonds received an A rating from Moody and an A+ from Fitch. The Fitch rating was
particularly significant because they removed a former "negative outlook" qualifier that
had been attached to the last bond sale in 2005.
Board Order 08-15
Whereas, the following was considered by the board of regents:
Consideration of Resolution Authorizing the Sale of the Texas Public
Finance Authority Stephen F. Austin State University Tuition Revenue
Bonds, Series 2008, in the Aggregate Principal Amount of $20,175,000;
Authorizing Actions by the Texas Public Finance Authority, Stephen F.
Austin State University, and Representatives thereof in Connection
with the Sale and Delivery of said Bonds; and Resolving Other Matters
Related Thereto.
Explanation:
The resolution authorizes the sale of bonds necessary to finance the tuition
revenue bond portion of the construction of the Education Research Center. Debt
is financed through the Stephen F. Austin State University Revenue Financing
System. Bond proceeds will be available March 4, 2008.
Therefore, upon motion by Regent Pond, seconded by Regent Amaral, with all members
voting aye, the resolution was passed authorizing the sale of bonds in the amount of
$20,175,000 to finance the tuition revenue bond portion of the construction of the Early
Childhood Research Development Center.
The meeting was adjourned at 1:06 p.m.
4
J
CERTIFICATE FOR RESOLUTION
THE STATE OF TEXAS §
STEPHEN F. AUSTIN STATE UNIVERSITY §
1, the undersigned officer of the Board of Regents of Stephen F. Austin State University, do
hereby certify as follows:
1. The Board of Regents of Stephen F. Austin State University convened in SPECIAL
MEETING ON THE 7TH DAY OF FEBRUARY, 2008, at the regular designated meeting place and
the roll was called of the duly constituted officers and members of said Board, to-wit:
and all of said persons were present, except the following absentees: None ,
* thus constituting a quorum. Whereupon, among other business, the following was transacted at said
-1 Meeting: a written
] RESOLUTION AUTHORIZING THE SALE OF THE TEXAS PUBLIC FINANCE
AUTHORITY STEPHEN F. AUSTIN STATE UNIVERSITY REVENUE
FINANCING SYSTEM REVENUE BONDS, SERIES 2008, IN THE AGGREGATE
! PRINCIPAL AMOUNT OF $20,175,000; AUTHORIZING ACTIONS BY THE
J TEXAS PUBLIC FINANCE AUTHORITY, STEPHEN F. AUSTIN STATE
UNIVERSITY, AND REPRESENTATIVES THEREOF IN CONNECTION WITH
; THE SALE AND DELIVERY OF SAID BONDS; AND RESOLVING OTHER
MATTERS RELATED THERETO
j was duly introduced for the consideration of the Board. It was then duly moved and seconded that
said Resolution be adopted; and, after due discussion, said motion, carrying with it the adoption of
1 said Resolution, prevailed and carried by the following vote:
AYES: 9 NOES: 0
70169350.1/10718173
2. That a true, full, and correct copy of the aforesaid Resolution adopted at the Meeting
described in the foregoing paragraph is attached to and follows this Certificate; that said Resolution
has been duly recorded in said Board's minutes of said Meeting; that the above and foregoing
paragraph is a true, full, and correct excerpt from said Board's minutes of said Meeting pertaining to
the adoption of said Resolution; that the persons named in the above and foregoing paragraph are the
duly chosen, qualified and acting officers and members of said Board as indicated therein; that each
of the officers and members of said Board was duly and sufficiently notified officially and
personally, in advance, of the time, place and purpose of the aforesaid Meeting, and that said
Resolution would be introduced and considered for adoption at said Meeting; and that said Meeting
was open to the public, and public notice of the time, place and purpose of said Meeting was given,
all as required by Chapter 551, Texas Government Code, as amended; and that the Meeting was held
as a telephone conference call pursuant to Section 551.121, Texas Government Code, and that it was
necessary to convene said Meeting immediately to finalize the terms and conditions relating to the
sale of the Bonds at a time when it was found difficult, and possibly impossible, to convene a
quorum of said Board in one location.
1 f I Ir-t^
J SIGNED AND SEALED this P^D I ^ , 2008-.
J
J
]
J
. . ™ y, Board of Regents
\ , . Stepnen F. Austin State University
i
70169350.1/10718173
RESOLUTION
AUTHORIZING THE SALE OF THE TEXAS PUBLIC
FINANCE AUTHORITY STEPHEN F. AUSTIN STATE
UNIVERSITY REVENUE FINANCING SYSTEM REVENUE
BONDS, SERIES 2008, IN THE AGGREGATE PRINCIPAL
AMOUNT OF $20,175,000; AUTHORIZING ACTIONS BY
THE TEXAS PUBLIC FINANCE AUTHORITY, STEPHEN
F. AUSTIN STATE UNIVERSITY, AND
REPRESENTATIVES THEREOF IN CONNECTION WITH
THE SALE AND DELIVERY OF SAID BONDS; AND
RESOLVING OTHER MATTERS RELATED THERETO
70169362.2/10718173
TABLE OF CONTENTS
Page
PREAMBLE 1
Section 1. REVENUE FINANCING SYSTEM AND ISSUANCE OF
PARITY OBLIGATIONS 4
Section 2. SECURITY AND PLEDGE 4
Section 3. COVENANTS RELATING TO PLEDGED REVENUES 5
Section 4. GENERAL COVENANTS 7
Section 5. ISSUANCE OF ADDITIONAL OBLIGATIONS 9
Section 6. DISPOSITION OF ASSETS ATTRIBUTABLE TO
FINANCING SYSTEM PARTICIPANTS 10
Section 7. COMBINATION, DIVISION, RELEASE AND ADMISSION
OF NEW INSTITUTIONS UNDER THE FINANCING SYSTEM.. 10
Section 8. WAIVER OF CERTAIN COVENANTS 11
Section 9. AMOUNT, PURPOSE, AND DESIGNATION OF THE BONDS.... 11
Section 10. DATE, DENOMINATIONS, NUMBERS, MATURITIES
AND TERMS OF BONDS 12
Section 11. INTEREST 14
Section 12. REGISTRATION, TRANSFER, AND EXCHANGE;
AUTHENTICATION; BOOK-ENTRY-ONLY SYSTEM 14
Section 13. FORM OF BONDS 19
Section 14. INDIVIDUALS NOT LIABLE 19
Section 15. SECURITY FOR THE BONDS 19
Section 16. PAYMENTS 19
Section 17. DAMAGED, MUTILATED, LOST, STOLEN, OR
DESTROYED BONDS 20
Section 18. REMEDIES 21
Section 19. DEFEASANCE OF OBLIGATIONS 21
Section 20. AMENDMENT OF RESOLUTION 22
Section 21. COVENANTS REGARDING TAX-EXEMPTION 25
Section 22. PRIOR REDEMPTION 28
70169362.2/10718173
Section 23. OTHER REPRESENTATIONS AND COVENANTS 28
Section 24. CONTINUING DISCLOSURE 28
Section 25. RESOLUTION TO CONSTITUTE A CONTRACT;
EQUAL SECURITY 30
Section 26. SEVERABILITY OF INVALID PROVISIONS 31
Section 27. PAYMENT AND PERFORMANCE ON BUSINESS DAY 31
Section 28. LIMITATION OF BENEFITS WITH RESPECT TO
THE RESOLUTION 31
Section 29. CUSTODY, APPROVAL, BOND COUNSEL'S
OPINION, CUSIP NUMBERS, PREAMBLE AND INSURANCE.. 31
Section 30. FURTHER PROCEDURES 32
Section 31. REPEAL OF CONFLICTING RESOLUTIONS 32
Section 32. REFERENCES TO AUTHORITY 32
Section 33. PERFECTION OF PLEDGE 32
Section 34. BOND INSURANCE 33
Section 35. PUBLIC NOTICE 33
SCHEDULE I
EXHIBIT A DEFINITIONS A-l
EXHIBIT B FORM OF BONDS B-l
EXHIBIT C DESCRIPTION OF ANNUAL FINANCIAL INFORMATION C-l
EXHIBIT D MUNICIPAL BOND INSURANCE COMMITMENT D-l
70169362.2/10718173
RESOLUTION
AUTHORIZING THE SALE OF THE TEXAS PUBLIC
FINANCE AUTHORITY STEPHEN F. AUSTIN STATE
UNIVERSITY REVENUE FINANCING SYSTEM REVENUE
BONDS, SERIES 2008, IN THE AGGREGATE PRINCIPAL
AMOUNT OF $20,175,000; AUTHORIZING ACTIONS BY
THE TEXAS PUBLIC FINANCE AUTHORITY, STEPHEN
F. AUSTIN STATE UNIVERSITY, AND
REPRESENTATIVES THEREOF IN CONNECTION WITH
THE SALE AND DELIVERY OF SAID BONDS; AND
RESOLVING OTHER MATTERS RELATED THERETO
WHEREAS, in order to reduce costs, increase borrowing capacity, provide additional
security to the credit markets, and provide greater financial flexibility, the Board of Regents (the
"Board") of Stephen F. Austin State University (the "University") deemed it necessary and
desirable to establish a revenue financing program for revenue supported indebtedness to provide
funds to acquire, purchase, construct, improve, renovate, enlarge or equip property, buildings,
structures, facilities, roads, or related infrastructure at the University, as well as any institution,
branch or entity hereafter placed under the control and governance of the Board, to the extent
permitted by Chapter 55, Texas Education Code, including specifically, but not by way of
limitation, Section 55.02 thereof; and
WHEREAS, Section 55.13 of the Texas Education Code authorizes the issuance of
revenue bonds for the purpose of providing funds to acquire, purchase, construct, improve,
enlarge, and/or equip any property, buildings, structures, activities, services, operations, or other
facilities, for and on behalf of the University; and
WHEREAS, the University has the authority to pledge the Pledged Revenues pursuant to
Sections 55.13, 55.17, 54.520 and 54.5201 of the Texas Education Code, for the purpose of
paying principal and interest amounts due on revenue bonds issued for and behalf of the
University from time to time; and
WHEREAS, pursuant to Section 55.1758 of the Texas Education Code, the University is
authorized to acquire, purchase, construct, improve, renovate, enlarge, or equip an education
research facility and passed a resolution, on October 30, 2007, authorizing a request for
financing from the Texas Public Finance Authority (the "Authority") for financing such project;
and
WHEREAS, the Authority is a public authority and body politic and corporate duly
established and existing under the laws of the State of Texas, including particularly Chapter
1232, Texas Government Code (hereafter referred to as the "TPFA Act"); and
WHEREAS, Section 1232.101 of the TPFA Act recites that the Authority has the
exclusive authority to act on behalf of the University in issuing bonds on its behalf, and Section
55.13(c) of the Texas Education Code provides that the Authority shall exercise the authority of
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the Board to issue bonds on behalf of the University, in the manner provided by Subchapter B of
Chapter 55, Texas Education Code; and
WHEREAS, Section 55.13, Texas Education Code, recites that the Authority has all the
rights and duties granted or assigned to and is subject to the same conditions as the Board under
Chapter 55, Texas Education Code; and
WHEREAS, the resolution entitled "Resolution Authorizing the Sale of the Board of
Regents of Stephen F. Austin State University Revenue Financing System, Texas Public Finance
Authority Revenue Bonds, Series 1998, in an Aggregate Principal Amount Not to Exceed $6
Million; Authorizing Actions by the Texas Public Finance Authority, Stephen F. Austin State
University and Representatives Thereof in Connection with the Sale and Delivery of Said Bonds;
and Resolving Other Matters Related Thereto" (the "Underlying Resolution") was adopted by the
Board on July 14, 1998 and by the Authority on August 12, 1998; and
WHEREAS, the Underlying Resolution established the Stephen F. Austin State
University Revenue Financing System for the purpose of providing a financing structure for
revenue supported indebtedness at the University; and
WHEREAS, pursuant to the terms of the Underlying Resolution, the Authority delivered
its Stephen F. Austin State University Revenue Financing System Revenue Bonds, Series 1998,
in the aggregate principal amount of $6,000,000 (the "Series 1998 Bonds");
WHEREAS, pursuant to the terms of a resolution adopted in compliance with the
requirements of the Underlying Resolution by the Board on March 8, 2000, and by the Authority
on March 8, 2000, the Authority delivered its Stephen F. Austin State University Revenue
Financing System Revenue Bonds, Series 2000, in the aggregate principal amount of $7,000,000
(the "Series 2000 Bonds"); and
WHEREAS, pursuant to the terms of a resolution adopted in compliance with the
requirements of the Underlying Resolution by the Board on June 18, 2002, and by the Authority
on June 18, 2002, the Authority delivered its Stephen F. Austin State University Revenue
Financing System Revenue Bonds, Series 2002, in the aggregate principal amount of
$14,070,000 (the "Series 2002 Bonds"); and
WHEREAS, pursuant to the terms of a resolution adopted in compliance with the
requirements of the Underlying Resolution by the Board on November 19, 2002, and by the
Authority on November 19, 2002, the Authority delivered its Stephen F. Austin State University
Revenue Financing System Revenue Bonds, Series 2002A, in the aggregate principal amount of
$1,320,000 (the "Series 2002A Bonds"); and
WHEREAS, pursuant to the terms of a resolution adopted in compliance with the
requirements of the Underlying Resolution by the Board on February 18, 2004, and by the
Authority on February 18, 2004, the Authority delivered its Stephen F. Austin State University
Revenue Financing System Revenue Bonds, Series 2004, in the aggregate principal amount of
2
$26,030,000 (the "Series 2004 Bonds"); and
WHEREAS, pursuant to the terms of a resolution adopted in compliance with the
requirements of the Underlying Resolution by the Board on August 17, 2004, and by the
Authority on August 17, 2004, the Authority delivered its Stephen F. Austin State University
Revenue Financing System Revenue Bonds, Series 2004A, in the aggregate principal amount of
$5,460,000 (the "Series 2004A Bonds"); and
WHEREAS, pursuant to the terms of a resolution adopted in compliance with the
requirements of the Underlying Resolution by the Board on June 8, 2005, and by the Authority
on June 8, 2005, the Authority delivered its Stephen F. Austin State University Revenue
Financing System Revenue Bonds, Series 2005, in the aggregate principal amount of
$17,215,000 (the "Series 2005 Bonds"); and
WHEREAS, pursuant to the terms of a resolution adopted in compliance with the
requirements of the Underlying Resolution by the Board on October 19, 2005, and by the
Authority on October 6, 2005, the Authority delivered its Stephen F. Austin State University
Revenue Financing System Revenue Bonds, Series 2005A, in the aggregate principal amount of
$55,365,000 (the "Series 2005A Bonds", and collectively with the Series 1998 Bonds, the Series
2000 Bonds, the Series 2002 Bonds, the Series 2002A Bonds, the Series 2004 Bonds, the Series
2004A Bonds, and the Series 2005 Bonds, the "Previously Issued Parity Obligations"); and
WHEREAS, the Previously Issued Parity Obligations were secured by a lien on and
pledge of the "Pledged Revenues" (as defined in the Underlying Resolution), which lien and
pledge were made subject to the lien on and pledge of the "Prior Encumbered Revenues" (as
defined in the Underlying Resolution); and
WHEREAS, the Underlying Resolution permits the Authority, at the request of the
Board, to issue "Parity Obligations" secured by a lien on and pledge of the Pledged Revenues on
a parity with the Previously Issued Parity Obligations; and
WHEREAS, the Board has requested that the Authority issue bonds on behalf of the
University, pursuant to the authorization granted to the University by Subchapter B of Chapter
55 of the Texas Education Code, as Parity Obligations under the Underlying Resolution, and
further requests that the Authority adopt this Resolution in furtherance of such objective; and
WHEREAS, the Authority finds it necessary and advisable to adopt this Resolution, and
further acknowledges that by adopting this Resolution it will be bound by and agrees to follow
the covenants set forth in this Resolution in its capacity of effecting the sale of the bonds
hereinafter described on behalf of the University; and
WHEREAS, the Board finds it necessary and advisable to adopt this Resolution, and
further acknowledges that by adopting this Resolution it will be bound by and agrees to follow
the covenants set forth in this Resolution; and
70169362.2/10718173
WHEREAS, the terms used in this Resolution and not otherwise defined shall have the
meaning given in Exhibit A to this Resolution attached hereto and made a part hereof;
NOW THEREFORE, BE IT RESOLVED BY THE BOARD OF REGENTS OF
STEPHEN F. AUSTIN STATE UNIVERSITY:
NOW THEREFORE, BE IT RESOLVED BY THE BOARD OF DIRECTORS OF
THE TEXAS PUBLIC FINANCE AUTHORITY:
Section 1. REVENUE FINANCING SYSTEM AND ISSUANCE OF PARITY
OBLIGATIONS. In the Underlying Resolution, the Stephen F. Austin State University
Revenue Financing System (the "Financing System") has been established, for the purpose of
providing a financing structure for revenue supported indebtedness to provide funds to acquire,
purchase, construct, improve, renovate, enlarge or equip property, buildings, structures, facilities,
roads or related infrastructure at the University, as well as at any institution, branch or entity
hereafter placed under the control and governance of the Board, under authority of the pertinent
provisions of the Texas Education Code.
Section 2. SECURITY AND PLEDGE, (a) Pledge. Subject to the provisions of the
resolutions authorizing Prior Encumbered Obligations, Parity Obligations shall be secured by
and payable from a lien on the Pledged Revenues, and the Board hereby assigns and pledges the
Pledged Revenues to the payment of the principal of, premium, if any, and interest on Parity
Obligations, and the Pledged Revenues are further pledged to the establishment and maintenance
of any funds which may be provided to secure the repayment of Parity Obligations in accordance
with this Resolution. The Authority, upon approval and consent of the Board, may execute and
deliver one or more Credit Agreements to additionally secure Parity Obligations. Credit
Agreements may also be secured by a pledge of Pledged Revenues on a parity with or
subordinate to Parity Obligations.
(b) Additional Participants. As provided in Section 7 of this Resolution, institutions
which may hereafter come under the control and governance of the Board may become
Participants in the Financing System and such institutions may, at such time, have outstanding
obligations secured by the Prior Encumbered Revenues and that, therefore, the lien on and
pledge of the Pledged Revenues established pursuant to this Resolution and effective when such
institutions become Participants in the Financing System will be subject and subordinate only to
such institutions' outstanding Prior Encumbered Obligations.
(c) Restriction on Issuance of Additional Debt on a Parity with Prior Encumbered
Obligations. Except as provided in Section 4(g) and for so long as any Parity Obligations are
Outstanding, no additional bonds, notes, or other obligations may be issued or incurred by the
Board on a parity with any Prior Encumbered Obligations.
(d) Parity Obligations are Special Obligations. All Parity Obligations and the
premium, if any, and the interest thereon shall constitute special obligations of the Board payable
from the Pledged Revenues, and the owners thereof shall never have the right to demand
4
payment out of funds raised or to be raised by taxation, or from any source other than the source
specified in this Resolution. The obligation of the Board to pay or cause to be paid the amounts
payable under this Resolution out of the Pledged Revenues shall be absolute, irrevocable,
complete, and unconditional, and the amount, manner, and time of payment of such amounts
shall not be decreased, abated, rebated, set-off, reduced, abrogated, waived, diminished, or
otherwise modified in any manner or to any extent whatsoever, regardless of any right of setoff,
recoupment, or counterclaim that the Board might otherwise have against any owner or any other
party and regardless of any contingency, force majeure, event, or cause whatsoever and
notwithstanding any circumstance or occurrence that may arise or take place before, during, or
after the issuance of Parity Obligations while any Parity Obligations are Outstanding.
Section 3. COVENANTS RELATING TO PLEDGED REVENUES, (a) Rate
Covenant. In each Fiscal Year, the Board shall establish, charge, and use its reasonable efforts
to collect at each Participant the Pledged Revenues which, if collected, would be sufficient to
meet all financial obligations of the Board for such Fiscal Year relating to the Financing System
including all deposits or payments due on or with respect to: (i) the Prior Encumbered
Obligations; and (ii) all Outstanding Parity Obligations.
(b) Tuition. Subject to the provisions of the resolutions authorizing Prior
Encumbered Obligations and to the other provisions of this Resolution, the Board covenants and
agrees to fix, levy, charge and collect at each Participant student tuition charges required or
authorized by law to be imposed on students enrolled at each Participant (excepting, with respect
to each series or issue of Parity Obligations, any student in a category which, at the time of
adoption of a resolution relating to such Parity Obligations, is exempt by law or by the Board
from paying such tuition charges). Each student (excluding those exempt from payment as
provided above), enrolled at each Participant, respectively, at each regular fall and spring
semester and at each term of each summer session, shall pay tuition charges in such amounts,
without any limitation whatsoever, as will be sufficient at all times, together with other legally
available Hinds, including other Pledged Revenues, to provide the money to make or pay the
principal of, interest on, and other payments or deposits with respect to Outstanding Parity
Obligations when and as required. All changes in the tuition charged students at each Participant
shall be made by resolution of the Board, but such procedure shall not constitute or be regarded
as an amendment of this Resolution, but merely the carrying out of the provisions and
requirements hereof.
(c) Student Center Fees. Subject to the provisions of the resolution authorizing the
Series 2004 Bonds, the Board covenants and agrees to fix, levy, charge and collect student center
fees required or authorized by law to be imposed on students pursuant to Section 54.520 of the
Texas Education Code for the purpose of paying debt service on the Series 2004 Bonds;
provided however, that such student center fees shall be used only for the purpose of acquiring,
constructing, renovating, operating, maintaining, improving, equipping, and financing a
university center or additions to the center.
(d) Student Recreational Sport Fees. Subject to the provisions of the resolution
authorizing the Series 2005A Bonds, the Board covenants and agrees to fix, levy, charge and
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collect student recreational sport fees required or authorized by law to be imposed on students
pursuant to Section 54.5201 of the Texas Education Code for the purpose of paying debt service
on the Series 2005A Bonds; provided however, that such student recreational sport fees shall be
used only to purchase equipment for and to construct, operate, and maintain recreational sports
facilities and programs.
(e) Anticipated Deficit. If the Board determines, for any reason whatsoever, that
there are not anticipated to be legally available funds, including Pledged Revenues, sufficient to
meet all financial obligations of the Board relating to the Financing System including the
deposits and payments due on or with respect to Outstanding Parity Obligations as the same
mature or come due, or that any Participant in the Financing System will be unable to pay its
Annual Direct Obligation in full, then the Board shall fix, levy, charge, and collect such rentals,
rates, fees, tuition, or other charges at each Participant in the Financing System with enrolled
students, effective at the next succeeding regular semester or semesters or summer term or terms,
in such amounts, without any limitation whatsoever (other than as provided in subsection (f)
below), as will be at least sufficient to provide, together with other legally available funds,
including Pledged Revenues, the money for making when due all financial obligations of the
Board relating to the Financing System including all payments and deposits due on or with
respect to Outstanding Parity Obligations when and as required by this Resolution.
(f) Economic Effect of Adjustments. Any adjustments in the rate or manner of
charging for any rentals, rates, fees, tuition, or other charges included in Pledged Revenues at
any Participant in the Financing System resulting from an event described in subsection (e)
above will be based upon a certificate and recommendation of the Designated Financial Officer,
delivered to the Board, as to the rates and anticipated collection of the Pledged Revenues at each
Participant in the Financing System (after taking into account the anticipated effect the proposed
adjustments in such rentals, rates, fees, tuition, or other charges would have on enrollment and
the receipt of Pledged Revenues and other funds at each Participant in the Financing System)
which will be anticipated to result in: (i) Pledged Revenues attributable to each Participant being
sufficient (to the extent possible) to satisfy the Annual Obligation of such Participant; and (ii)
Pledged Revenues being sufficient, together with other legally available funds, to meet all
financial obligations of the Board relating to the Financing System including all deposits and
payments due on or with respect to: (A) the Prior Encumbered Obligations; and (B) all
Outstanding Parity Obligations, when and as required by this Resolution.
(g) Annual Obligation. If, in the judgment of the Board, any Participant in the
Financing System has been or will be unable to satisfy its Annual Obligation, the Board shall fix,
levy, charge, and collect rentals, rates, fees, and charges for goods and services furnished by such
Participant and, with respect to Participants with enrolled students, tuition, effective at the next
succeeding regular semester or semesters or summer term or terms, in amounts sufficient,
without limit (subject to the provisions of (f) above), together with other legally available funds,
including other Pledged Revenues attributable thereto, to enable it to make its Annual Obligation
payments.
(h) Additional Participants. The Board hereby agrees to apply the covenants
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70169362.2/10718173
hereinabove made to any institution, branch or entity hereinafter placed under the control and
governance of the Board and added as a Participant in the Financing System in accordance with
the provisions of Section 7 hereof.
Section 4. GENERAL COVENANTS. The Board further represents, covenants,
and agrees that while any Parity Obligations or interest thereon is Outstanding:
(a) Payment of Parity Obligations. On or before each payment date it shall make
available to the Paying Agent for such Parity Obligations or to such other party as required by
the resolution authorizing the sale of such Parity Obligations, money sufficient to pay the interest
on, principal of, and premium, if any, on the Parity Obligations as will accrue or otherwise come
due or mature, or be subject to mandatory redemption prior to maturity, on such date and the fees
and expenses related to the Parity Obligations, including the fees and expenses of the Paying
Agent and any Registrar, trustee, remarketing agent, tender agent, or Credit Provider.
(b) Performance. It will faithfully perform at all times any and all covenants,
undertakings, stipulations, and provisions contained in this Resolution, and in each and every
Parity Obligation or evidence thereof.
(c) Redemption. It will duly cause to be called for redemption prior to maturity, and
will cause to be redeemed prior to maturity, all Parity Obligations which by their terms are
mandatorily required to be redeemed prior to maturity, when and as so required.
(d) Lawful Title. It lawfully owns, has title to, or is lawfully possessed of the lands,
buildings, and facilities now constituting the University, and it will defend said title and title to
any lands, buildings, and facilities which may hereafter become part of the Financing System, for
the benefit of the owners of Parity Obligations against the claims and demands of all persons
whomsoever.
(e) Lawful Authority. It is lawfully qualified to pledge the Pledged Revenues herein
pledged in the manner prescribed herein and has lawfully exercised such right.
(f) Preservation of Lien. Subject to the conditions set forth in Sections 5, 6, and 7 of
this Resolution, it will not do any act or thing whereby the Financing System might or could be
impaired, and that it will at all times maintain, preserve, and keep the real and tangible property
of the Financing System and every part thereof in good condition, repair, and working order and
operate, maintain, preserve, and keep the facilities, buildings, structures, and equipment
pertaining thereto in good condition, repair, and working order.
(g) No Additional Encumbrance. It shall not incur additional Debt secured by the
Pledged Revenues in any manner, except as permitted by this Resolution in connection with
Parity Obligations, unless said Debt is made junior and subordinate in all respects to the liens,
pledges, covenants, and agreements of this Resolution. Notwithstanding anything to the contrary
contained herein, and in addition to the right hereunder to refund the Prior Encumbered
Obligations with Parity Obligations, the Board reserves the right to issue obligations to refund
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any Prior Encumbered Obligations and to secure the refunding obligations with the same source
or sources securing the Prior Encumbered Obligations being refunded. Upon the defeasance of
the refunded Prior Encumbered Obligations, the refunding obligations will be Prior Encumbered
Obligations (unless the refunding obligations are made Parity Obligations in accordance with the
terms of this Resolution and the resolution authorizing their issuance) under this Resolution for
all purposes.
(h) Investments and Security. It will invest and secure money in all accounts and
funds established pursuant to this Resolution in the manner prescribed by law for such funds,
including, but not by way of limitation, the Public Funds Investment Act (Chapter 2256, Texas
Government Code), Chapter 163, Texas Property Code, and Section 51.0031, Texas Education
Code, and in accordance with written policies adopted by the Board.
(i) Records. It will keep proper books of record and account in which full, true, and
correct entries will be made of all dealings, activities, and transactions relating to the University.
Each year while Parity Obligations are Outstanding, the Board will prepare from such books of
record and account an annual financial report of the University and shall furnish such report to
the Authority, to the principal municipal bond rating agencies, and to any owner of Parity
Obligations who shall request same. In addition, the Board shall submit such financial report
and other information required by law for examination in connection with financial compliance
and other audits required to be conducted by the Office of the Auditor of the State of Texas.
(j) Inspection of Books. It will permit the Authority and any owner or owners of
twenty-five percent (25%) or more of the then Outstanding Principal Amount at all reasonable
times to inspect all records, accounts, and data of the Board relating to the University and the
Financing System.
(k) Annual and Direct Obligations. In establishing the annual budget for each
Participant in the Financing System, it shall provide for the satisfaction by each Participant in the
Financing System of its Annual Obligation. The Direct Obligation shall represent the financial
responsibility of each Participant in the Financing System with respect to Outstanding Parity
Obligations. Each such Participant's Direct Obligation and Annual Obligation shall be evidenced
by a financing agreement between the Board and each Participant.
(1) Determination of Outstanding Parity Obligations. For all purposes of this
Resolution, the judgment of the chief financial officer of the University, presently the Vice
President for Finance and Administration, shall be deemed final in the determination of which
obligations of the Board constitute Parity Obligations; provided, however, such judgment is
subject to confirmation by the Auditor of the State of Texas in connection with the annual audit
of the records of the University.
(m) Execution of Credit Agreements, (i) For so long as the Authority possesses the
exclusive authority to issue bonds on behalf of the University, should the Board or the Authority
determine that it is in the best interests of the University to obtain a Credit Agreement to enhance
the security for or provide for the payment, redemption, or remarketing of Parity Obligations, the
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Authority, upon approval of the Attorney General and approval and consent of the Board, may
from time to time and at any time to execute and deliver a Credit Agreement to which the
Pledged Revenues are to be pledged. The Authority agrees that it shall use reasonable efforts to
negotiate and deliver, on behalf of the University, a Credit Agreement containing terms and
conditions mutually acceptable to the Authority and the Board; provided, however, that prior to
the Authority adopting any resolution authorizing the execution and delivery of any such Credit
Agreement, it shall receive from the University an Officer's Certificate to the effect that: (a) the
Board has determined that the Participant for whom the Credit Agreement is to be executed and
delivered possesses the financial capability to satisfy its Direct Obligation after taking into
account the payment obligations under the proposed Credit Agreement; and (b) to the best of his
or her knowledge, the Board is in compliance with all covenants contained in this Resolution and
any resolution adopted authorizing the issuance of Parity Obligations, and is not in default in the
performance and observance of any of the terms, provisions, and conditions hereof or thereof.
(ii) The Board agrees to provide promptly to the Authority substantially final versions
of all documents pertaining to any "credit agreement" (as defined in Chapter 1371, Texas
Government Code), to which the Pledged Revenues are to be pledged, proposed to be executed
and delivered by the Board to enhance the security for or provide for the payment, redemption,
or remarketing of the Prior Encumbered Obligations. The Board further agrees that it shall give
written notice to the Authority no later than thirty (30) days prior to the date the Board considers
for approval any resolution authorizing the execution and delivery of any such credit agreement.
The lien on and pledge of Pledged Revenues to pay the cost of any such credit agreement may be
on a parity with, but not superior to, the lien on and pledge of the Pledged Revenues securing the
Parity Obligations.
Section 5. ISSUANCE OF ADDITIONAL OBLIGATIONS. (a) Parity
Obligations. The Board reserves and shall have the right and power to issue or incur, or request
that the Authority, on its behalf, issue or incur, Parity Obligations for any purpose authorized by
law pursuant to the provisions of this Resolution and the applicable laws of the State of Texas
governing the issuance of bonds for the benefit of the University. The Board, or the Authority
acting on behalf of the Board, may incur, assume, guarantee, or otherwise become liable in
respect of any Parity Obligations if the Board shall have determined that it will have sufficient
funds to meet the financial obligations of each Participant (currently the University) in the
Financing System, including sufficient Pledged Revenues to satisfy the Annual Debt Service
Requirements of the Financing System and to meet all financial obligations of the Board relating
to the Financing System. In addition, the Board shall not issue or incur Parity Obligations
unless: (i) the Board shall determine that the Participant for whom the Parity Obligations are
being issued or incurred possesses the financial capability to satisfy its Direct Obligation after
taking into account the then proposed Parity Obligations; and (ii) a Designated Financial Officer
shall deliver to the Board and the Authority a certificate stating that, to the best of his or her
knowledge, the Board is in compliance with all covenants contained in this Resolution and any
resolution adopted authorizing the issuance of Parity Obligations, and is not in default in the
performance and observance of any of the terms, provisions, and conditions hereof or thereof.
(b) Non-Recourse Debt and Subordinated Debt. Non-Recourse Debt and
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Subordinated Debt may be incurred by the Board without limitation, subject to the applicable
laws of the State of Texas.
Section 6. DISPOSITION OF ASSETS ATTRIBUTABLE TO FINANCING
SYSTEM PARTICIPANTS. Except as otherwise may be required to preserve the tax exempt
status of the Bonds, the Board may convey, sell, or otherwise dispose of any properties of each
Participant (currently the University) in the Financing System provided:
(a) Ordinary Course. Such conveyance, sale, or disposition shall be in the ordinary
course of business of such Participant which uses, operates, owns, or is otherwise responsible for
such properties; or
(b) Disposition Upon Board Determination. The Board shall determine that after the
conveyance, sale, or other disposition of such properties, the Board shall have sufficient funds
during each Fiscal Year during which Parity Obligations are to be Outstanding to meet the
financial obligations of each Participant in the Financing System, including sufficient Pledged
Revenues to satisfy the Annual Debt Service Requirements of the Financing System and to meet
all financial obligations of the Board relating to the Financing System.
Section 7. COMBINATION, DIVISION, RELEASE AND ADMISSION OF
NEW INSTITUTIONS UNDER THE FINANCING SYSTEM, (a) Combination and
Division. Notwithstanding anything to the contrary contained herein, it is recognized that certain
institutions which may become Participants in the Financing System may be combined or
divided and that so long as such combined or divided institutions continue to be governed by the
Board such action shall not be in violation of the provisions of this Resolution or require any
amendments of the provisions hereof.
(b) Release. Subject to the conditions set forth below, any Participant in the
Financing System or portion thereof may be closed and abandoned by law or may be removed
from the Financing System (thus deleting the revenues, income, funds and balances attributable
to said Participant or portion thereof from Pledged Revenues) without violating the terms of this
Resolution provided:
(1) the Board approves and delivers to the Authority an Officers' Certificate to
the effect that, to the knowledge thereof, after the release of such Participant or portion
thereof, the Board will have sufficient funds during each Fiscal Year in which Parity
Obligations shall thereafter be Outstanding to meet the financial obligations of the Board,
including sufficient Pledged Revenues to satisfy the Annual Debt Service Requirements
of the Financing System and to meet all financial obligations of the Board relating to the
Financing System; and
(2) the Board and the Authority receive an Opinion of Counsel which shall
state that such release will not affect the status for federal income tax purposes of interest
on any Outstanding Parity Obligations and that all conditions precedent provided in this
Resolution or any resolution hereafter adopted governing the issuance of Parity
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Obligations relating to such release have been complied with; and
(3) (A) if the Participant or portion thereof to be released from the Financing
System is to remain under the governance and control of the Board, the Board must
either: (i) provide, from lawfully available funds, including Pledged Revenues
attributable to said withdrawing Participant, for the payment or discharge of said
Participant's Direct Obligation; or (ii) pledge to the payment of Parity Obligation,
additional resources not then pledged in an amount sufficient to satisfy such withdrawing
Participant's Direct Obligation; or
(B) if the Participant or portion thereof to be released from the Financing
System is to no longer be under the governance and control of the Board and remains in
operation independent of the Board, the Board must enter into a binding obligation with
the new governing body of the withdrawing institution or the portion thereof being
withdrawn, obligating said governing body to make payments to the Board at the times
and in the amounts equal to said Participant's Annual Obligation or to pay or discharge
said Participant's Direct Obligation, or, in the case of a portion of a Participant being
withdrawn, the proportion of the Participant's Annual Obligation or Direct Obligation, as
the case may be, attributable to the withdrawing portion of the Participant.
(c) If, after the date of the adoption of this Resolution, the Board desires for an
institution or agency governed by the Board to become a Participant of the Financing System, or
if the Board is required by law to assume the governance of an institution or agency, it may
include said institution or agency in the Financing System with the effect set forth in this
Resolution by the adoption of a resolution amending this Resolution, which resolution shall be
binding upon the Authority.
Section 8. WAIVER OF CERTAIN COVENANTS. The Board may omit in any
particular instance to comply with any covenant or condition set forth in Sections 3 through 7
hereof if before or after the time for such compliance the Holders of the same percentage in
principal amount of all Parity Obligations then Outstanding, the consent of which would be
required to amend the provisions hereof to permit such noncompliance, shall either waive such
compliance in such instance or generally waive compliance with such covenant or condition, but
no such waiver shall extend to or affect such covenant or condition except to the extent so
expressly waived and, until such waiver shall become effective, the obligations of the Board and
the duties of the Board in respect to any such covenant or condition shall remain in full force and
effect. For purposes of this Section, if a municipal bond insurance policy has been issued
insuring the payment of any Outstanding Parity Obligations, the term Holder shall mean the
company that has issued any such insurance policy or policies.
Section 9. AMOUNT, PURPOSE, AND DESIGNATION OF THE BONDS. The
"TEXAS PUBLIC FINANCE AUTHORITY STEPHEN F. AUSTIN STATE UNIVERSITY
REVENUE FINANCING SYSTEM REVENUE BONDS, SERIES 2008", are hereby
authorized to be issued and delivered in the aggregate principal amount of $20,175,000 for the
purpose of: (i) acquiring, purchasing, constructing, improving, renovating, enlarging, or
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equipping an education research facility; and (ii) paying the costs related to the issuance of the
Bonds. The sale of the Bonds shall be effected by the Authority pursuant to Section 1232.101 of
the TPFA Act and Sections 55.13(c) and 55.17, Texas Education Code. The adoption of this
resolution by the Board shall be deemed to be a request by the Board to the Authority to issue the
Bonds for the purposes stated in this Section.
Section 10. DATE, DENOMINATIONS, NUMBERS, MATURITIES AND
TERMS OF BONDS, (a) Terms of Bonds. Initially there shall be issued, sold, and delivered
hereunder fully registered bonds, without interest coupons, numbered consecutively from R-l
upward (except the initial Bonds delivered to the Attorney General of the State of Texas which
shall be numbered from T-l upward), payable to the respective initial registered owners thereof,
or to the registered assignee or assignees of said bonds or any portion or portions thereof (in each
case, the "Registered Owner"), in the denominations of $5,000 or any integral multiples of
$5,000 thereafter (an "Authorized Denomination"), maturing serially or otherwise on the dates,
in the years and in the principal amounts, respectively, and dated, all as set forth in Schedule I
attached to this Resolution. The Bonds will be sold through a competitive bid sale, the terms of
which will be approved by the Authority on the date this Resolution is adopted by the Authority.
The Designated Financial Officer is authorized to execute Schedule I attached to this Resolution
on behalf of the Board to acknowledge the sale of the Bonds.
(b) Purchaser. The sale of the Bonds to the investment banking firm or firms named
in Schedule I attached to this Resolution (the "Purchaser") at the purchase price set forth therein,
is hereby authorized, ratified and confirmed. One Bond in the principal amount maturing on
each maturity date as set forth in Schedule I attached to this Resolution shall be delivered to the
Purchaser, and the Purchaser shall have the right to exchange such Bonds as provided in Section
12 hereof without cost. The Authority does hereby officially find, determine and declare that the
Bonds were sold to the highest bidder at terms that were the most advantageous reasonably
obtained.
(c) Offering Documents. The Official Notice of Sale and the Official Bid Form,
together with any addenda thereto, prepared and circulated with respect to the sale of the Bonds,
are hereby approved.
(d) Official Statement, (i) The preliminary official statement and the use thereof in
the solicitation of offers for the purchase of the Bonds is hereby approved and the preliminary
official statement is deemed final as of its date (pursuant to the Rule).
(ii) The Authority authorizes the preliminary official statement to be:
(A) supplemented to include such additional information and amendments as may
be necessary to confirm the official statement to the terms of the Bonds and this
Resolution; and
(B) modified if, in the opinion of Bond Counsel, such modification is necessary to
satisfy the disclosure requirements of the applicable federal securities laws.
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(iii) Upon the final official statement being modified, if necessary, pursuant to clause
(ii) of this subsection (e), the final official statement, as so supplemented and modified, shall be
deemed to be approved by the Authority as the final official statement (for purposes of the Rule)
for the Bonds and an appropriate number of copies shall be delivered to the Underwriters for use
in connection with the offer and sale of the Bonds.
(f) Bond Proceeds; Deposit to Construction Fund. There is hereby created and
established a separate fund designated as the "Stephen F. Austin State University Series 2008
Bond Proceeds Construction Fund" (the "Construction Fund"). The Construction Fund shall
be held by the University with its depository bank or as otherwise directed by the University.
Within the Construction Fund there shall be established and maintained accounts designated as
the "Accrued Interest Account", the "Cost of Issuance Account" and the "Project
Account", respectively. Moneys deposited in the Construction Fund shall remain therein until
from time to time expended for the purposes described in this Resolution, and shall not be used
for any other purposes whatsoever, except as otherwise provided below, and pending such
expenditure, moneys in the Construction Fund may be invested at the direction of the Designated
Financial Officer or the designee thereof in eligible investments in accordance with the
provisions of Section 4(h) of this Resolution. Interest earnings shall accrue to the respective
accounts in which moneys are held and invested. The Authority shall cause such proceeds of the
Bonds to be deposited to the credit of the Construction Fund, in accordance with a letter of
instructions which may be executed on behalf of the Authority by its Executive Director, which
letter shall designate the fiinds to be deposited to the credit of the Accrued Interest Account, the
Cost of Issuance Account and the Project Account; provided, that only moneys representing
accrued interest and capitalized interest received from the proceeds of the Bonds shall be
deposited to the credit of the Accrued Interest Account. The University agrees that it shall pay
those costs of issuance incurred in connection with the issuance and delivery of the Bonds as are
consistent with the approval of the issuance of the Bonds by the Texas Bond Review Board and
are approved in writing by the Authority, acting through its Executive Director. The University
shall cause moneys on deposit in the Accrued Interest Account to be used to pay debt service on
the Bonds as the same shall become due and payable. The University agrees to expend the
moneys in the Project Account within the Construction Fund on costs incurred in connection
with the purposes described in Section 9 of this Resolution, consistent with the provisions of
Subchapter B, Chapter 55, Texas Education Code. Any amounts remaining in the Project
Account within the Construction Fund after the payment of all costs incurred in connection with
the purposes set out in clause (i) of Section 9 of this Resolution shall be used for the payment of
the principal of and interest on the Bonds as the same shall become due and payable. The
University shall provide to the Authority an Officer's Certificate, the form and substance of
which is described in the memorandum of understanding between the Authority and the Board
detailing the expenditure of bond proceeds. The Authority hereby finds that the deposit of the
proceeds from the sale of the Bonds in the manner outlined above is consistent with the
conditions surrounding the issuance of bonds previously issued directly by the University, and
that the procedure outlined above is adopted in accordance with Section 1232.101 of the TPFA
Act.
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(g) In General The Bonds: (i) may be assigned and transferred; (ii) may be
exchanged for other Bonds; (iii) shall have the characteristics; and (iv) shall be signed and
sealed, and the principal of and interest on the Bonds shall be payable, all as provided, and in the
manner required or indicated, in the FORM OF BONDS set forth in Exhibit B to this Resolution.
Section 11. INTEREST. The Bonds shall bear interest calculated on the basis of a
360-day year composed of twelve 30-day months from the dates specified in the FORM OF
BONDS set forth in Exhibit B to this Resolution to their respective dates of maturity or
redemption prior to maturity at the rates set forth in Schedule I attached to this Resolution.
Section 12. REGISTRATION, TRANSFER, AND EXCHANGE;
AUTHENTICATION; BOOK-ENTRY-ONLY SYSTEM, (a) Paying Agentmegistrar. Wells
Fargo Bank, National Association, is hereby appointed to act as the Paying Agent/Registrar for
the Bonds. The Designated Financial Officer is authorized to enter into and carry out a Paying
Agent/Registrar Agreement with the Paying Agent/Registrar with respect to the Bonds, a copy of
which is attached to this Resolution.
(b) Registration Books. The Board shall keep or cause to be kept at the corporate
trust office of the Paying Agent/Registrar designated in the Paying Agent/Registrar Agreement
(the "Designated Trust Office") books or records for the registration of the transfer, exchange,
and replacement of the Bonds (the "Registration Books"), and the Paying Agent/Registrar is
hereby appointed to serve as registrar and transfer agent to keep such books or records and make
such registrations of transfers, exchanges, and replacements under such reasonable regulations as
the Board and Paying Agent/Registrar may prescribe; and the Paying Agent/Registrar shall make
such registrations, transfers, exchanges, and replacements as herein provided. The Paying
Agent/Registrar shall obtain and record in the Registration Books the address of the registered
owner of each Bond to which payments with respect to the Bonds shall be mailed, as herein
provided; but it shall be the duty of each registered owner to notify the Paying Agent/Registrar in
writing of the address to which payments shall be mailed, and such interest payments shall not be
mailed unless such notice has been given. The Authority and the Board each shall have the right
to inspect the Registration Books at the Designated Trust Office of the Paying Agent/Registrar
during regular business hours, but otherwise the Paying Agent/Registrar shall keep the
Registration Books confidential and, unless otherwise required by law, shall not permit their
inspection by any other entity.
(c) Ownership of Bonds. The entity in whose name any Bond shall be registered in
the Registration Books at any time shall be deemed and treated as the absolute owner thereof for
all purposes of this Resolution, whether such Bond shall be overdue, and, to the extent permitted
by law, the Authority, the Board and the Paying Agent/Registrar shall not be affected by any
notice to the contrary; and payment of, or on account of, the principal of, premium, if any, and
interest on any such Bond shall be made only to such registered owner. All such payments shall
be valid and effective to satisfy and discharge the liability upon such Bond to the extent of the
sum or sums so paid.
(d) Payment of Bonds and Interest. The Paying Agent/Registrar shall further act as
the paying agent for paying the principal of, premium, if any, and interest on the Bonds, all as
70169362.2/10718173
14
provided in this Resolution. The Paying Agent/Registrar shall keep proper records of all
payments made by the University and the Paying Agent/Registrar with respect to the Bonds.
Notwithstanding any other provision of this Resolution to the contrary but to the extent permitted
by law, the Authority, the Board and the Paying Agent/Registrar shall be entitled to treat and
consider the person in whose name each Bond is registered in the Registration Books as the
absolute owner of such Bond for the purpose of payment of principal, premium, if any, and
interest, with respect to such Bond, for the purposes of registering transfers with respect to such
Bond, and for all other purposes of registering transfers with respect to such Bonds, and for all
other purposes whatsoever. The Paying Agent/Registrar shall pay all principal of, premium, if
any, and interest on the Bonds only to or upon the order of the respective owners, as shown in
the Registration Books as provided in this Resolution, or their respective attorneys duly
authorized in writing, and all such payments shall be valid and effective to fully satisfy and
discharge the Board's obligations with respect to payment of principal of, premium, if any, and
interest on the Bonds to the extent of the sum or sums so paid. No person other than an owner,
as shown in the Registration Books, shall receive a Bond certificate evidencing the obligation of
the Board to make payments of principal, premium, if any, and interest pursuant to this
Resolution.
(e) Authentication. On the date of initial delivery of the Bonds, the initial bonds (the
"Initial Bonds") approved by the Attorney General, and registered and manually signed by the
Comptroller of Public Accounts, will be delivered to the Representative or its designee. Upon
payment for the Initial Bonds, the Paying Agent/Registrar shall cancel the Initial Bonds and
deliver registered definitive Bonds to DTC in accordance with Section 12(h). On each substitute
Bond issued in exchange for any Bond or Bonds issued under this Resolution the Paying
Agent/Registrar shall execute the PAYING AGENT/REGISTRAR'S AUTHENTICATION
CERTIFICATE (the "Authentication Certificate"). The Authentication Certificate shall be in the
form set forth in the FORM OF BONDS.
(f) Transfer, Exchange, or Replacement. Each Bond issued and delivered pursuant
to this Resolution, to the extent of the unpaid or unredeemed principal amount thereof, may,
upon surrender of such Bond at the Designated Trust Office of the Paying Agent/Registrar,
together with a written request therefor duly executed by the registered owner or the assignee or
assignees thereof, or its or their duly authorized attorneys or representatives, with guarantee of
signatures satisfactory to the Paying Agent/Registrar, may, at the option of the registered owner
or such assignee or assignees, as appropriate, be exchanged for fully registered bonds, without
interest coupons, in the appropriate form prescribed in the FORM OF BONDS set forth in this
Resolution, in any Authorized Denomination (subject to the requirement hereinafter stated that
each substitute Bond shall be of the same series and have a single stated maturity date), as
requested in writing by such registered owner or such assignee or assignees, in an aggregate
principal amount equal to the unpaid or unredeemed principal amount of any Bond or Bonds so
surrendered, and payable to the appropriate registered owner, assignee, or assignees, as the case
may be. If a portion of any Bond shall be redeemed prior to its scheduled maturity as provided
herein, a substitute Bond or Bonds having the same series designation and maturity date, bearing
interest at the same rate, and payable in the same manner, in Authorized Denominations at the
request of the registered owner, and in an aggregate principal amount equal to the unredeemed
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portion thereof, will be issued to the registered owner upon surrender thereof for cancellation. If
any Bond or portion thereof is assigned and transferred, each Bond issued in exchange therefor
shall have the same series designation and maturity date and bear interest at the same rate and
payable in the same manner as the Bond for which it is being exchanged. Each substitute Bond
shall bear a letter and/or number to distinguish it from each other Bond. The Paying
Agent/Registrar shall exchange or replace Bonds as provided herein, and each fully registered
bond delivered in exchange for or replacement of any Bond or portion thereof as permitted or
required by any provision of this Resolution shall constitute one of the Bonds for all purposes of
this Resolution, and may again be exchanged or replaced. On each substitute Bond issued in
exchange for or replacement of any Bond or Bonds issued under this Resolution there shall be
printed an Authentication Certificate, in the form set forth in the FORM OF BONDS set forth in
Exhibit B to this Resolution. An authorized representative of the Paying Agent/Registrar shall,
before the delivery of any such Bond, date and manually sign the Authentication Certificate, and,
except as provided in subsection (e) above, no such Bond shall be deemed to be issued or
outstanding unless the Authentication Certificate is so executed. The Paying Agent/Registrar
promptly shall cancel all Bonds surrendered for transfer, exchange, or replacement. No
additional orders or resolutions need be passed or adopted by the Board or any other body or
person so as to accomplish the foregoing transfer, exchange, or replacement of any Bond or
portion thereof, and the Paying Agent/Registrar shall provide for the printing, execution, and
delivery of the substitute Bonds in typed or printed form and in the manner prescribed herein.
Pursuant to Chapter 1206, Texas Government Code, the duty of transfer, exchange, or
replacement of Bonds as aforesaid is hereby imposed upon the Paying Agent/Registrar, and,
upon the execution of the Authentication Certificate, the exchanged or replaced Bond shall be
valid, incontestable, and enforceable in the same manner and with the same effect as the Bonds
which were originally issued pursuant to this Resolution. The Board shall pay the Paying
Agent/Registrar's standard or customary fees and charges, if any, for transferring, and
exchanging any Bond or any portion thereof, but the one requesting any such transfer and
exchange shall pay any taxes or governmental charges required to be paid with respect thereto as
a condition precedent to the exercise of such privilege. The Paying Agent/Registrar shall not be
required to make any such transfer, exchange, or replacement of Bonds or any portion thereof: (i)
during the period commencing with the close of business on any Record Date and ending with
the opening of business on the next following interest payment date; or, (ii) with respect to any
Bond or portion thereof called for redemption prior to maturity, within 45 days prior to its
redemption date. To the extent possible, any new Bond issued in an exchange, replacement, or
transfer of a Bond will be delivered to the registered owner or assignee of the registered owner
not more than three business days after the receipt of the Bonds to be cancelled and the written
request as described above.
(g) Substitute Paying Agent/Registrar. The Board covenants with the registered
owners of the Bonds that at all times while the Bonds are outstanding the Board will provide a
competent and legally qualified bank, trust company, financial institution, or other agency to act
as and perform the services of Paying Agent/Registrar for the Bonds under this Resolution, and
that the Paying Agent/Registrar will be one entity. The Board reserves the right to, and may, at
its option, change the Paying Agent/Registrar upon not less than 120 days written notice to the
Paying Agent/Registrar, to be effective not later than 60 days prior to the next principal or
16
interest payment date after such notice. In the event that the entity at any time acting as Paying
Agent/Registrar (or its successor by merger, acquisition, or other method) should resign or
otherwise cease to act as such, the Board covenants that promptly it will appoint a competent and
legally qualified bank, trust company, financial institution, or other agency to act as Paying
Agent/Registrar under this Resolution. Upon any change in the Paying Agent/Registrar, the
previous Paying Agent/Registrar promptly shall transfer and deliver the Registration Books (or a
copy thereof), along with all other pertinent books and records relating to the Bonds, to the new
Paying Agent/Registrar designated and appointed by the Board. Upon any change in the Paying
Agent/Registrar, the Board promptly will cause a written notice thereof to be sent by the new
Paying Agent/Registrar to the Authority and to each registered owner of the Bonds, by United
States mail, first-class postage prepaid, which notice also shall give the address of the new
Paying Agent/Registrar. By accepting the position and performing as such, each Paying
Agent/Registrar shall be deemed to have agreed to the provisions of this Resolution, and a
certified copy of this Resolution shall be delivered to each Paying Agent/Registrar.
(h) Book-Entry-Only System. The Bonds issued in exchange for the Bonds initially
issued and delivered to the Underwriters shall be issued in the form of a separate single fully
registered Bond for each of the maturities thereof registered in the name of Cede & Co., as
nominee of DTC, and except as provided in subsection (i) hereof, all of the Outstanding Bonds
shall be registered in the name of Cede & Co., as nominee of DTC. The Authority heretofore
has executed a "DTC Blanket Letter of Representations" in connection with utilizing the DTC
Book-Entry-Only System.
With respect to Bonds registered in the name of Cede & Co., as nominee of DTC, the
Authority, the Board and the Paying Agent/Registrar shall have no responsibility or obligation to
any DTC Participant or to any person on behalf of whom such a DTC Participant holds an
interest in the Bonds. Without limiting the immediately preceding sentence, the Authority, the
Board and the Paying Agent/Registrar shall have no responsibility or obligation with respect to:
(i) the accuracy of the records of DTC, Cede & Co. or any DTC Participant with respect to any
ownership interest in the Bonds; (ii) the delivery to any DTC Participant or any other person,
other than a Bondholder, as shown on the Registration Books, of any notice with respect to the
Bonds, including any notice of redemption; or (iii) the payment to any DTC Participant or any
other person, other than a Bondholder, as shown in the Registration Books of any amount with
respect to principal of, premium, if any, or interest on the Bonds. Notwithstanding any other
provision of this Resolution to the contrary but to the extent permitted by law, the Authority, the
Board and the Paying Agent/Registrar shall be entitled to treat and consider the person in whose
name each Bond is registered in the Registration Books as the absolute owner of such Bond for
the purpose of payment of principal, premium, if any, and interest, with respect to such Bond, for
the purposes of registering transfers with respect to such Bond, and for all other purposes of
registering transfers with respect to such Bonds, and for all other purposes whatsoever. The
Paying Agent/Registrar shall pay all principal of, premium, if any, and interest on the Bonds only
to or upon the order of the respective owners, as shown in the Registration Books as provided in
this Resolution, or their respective attorneys duly authorized in writing, and all such payments
shall be valid and effective to fully satisfy and discharge the Board's obligations with respect to
payment of principal of, premium, if any, and interest on the Bonds to the extent of the sum or
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sums so paid. No person other than an owner, as shown in the Registration Books, shall receive
a Bond certificate evidencing the obligation of the Board to make payments of principal,
premium, if any, and interest pursuant to this Resolution. Upon delivery by DTC to the Paying
Agent/Registrar of written notice to the effect that DTC has determined to substitute a new
nominee in place of Cede & Co., and subject to the provisions in this Resolution with respect to
interest checks being mailed to the registered owner at the close of business on the Record Date,
the word "Cede & Co." in this Resolution shall refer to such new nominee of DTC.
(i) Successor Securities Depository; Transfers Outside Book-Entry-Only System.
In the event that the Board or the Paying Agent/Registrar determines that DTC is incapable of
discharging its responsibilities described herein and in the representation letter of the Board to
DTC (as referred in subsection (h) above) or DTC determines to discontinue providing its
services with respect to the Bonds, the Board shall: (i) appoint a successor securities depository,
qualified to act as such under Section 17(a) of the Securities and Exchange Act of 1934, as
amended, notify DTC and DTC Participants of the appointment of such successor securities
depository and transfer one or more separate Bonds to such successor securities depository; or
(ii) notify DTC and DTC Participants of the availability through DTC of Bonds and transfer one
or more separate Bonds to DTC Participants having Bonds credited to their DTC accounts. In
such event, the Bonds shall no longer be restricted to being registered in the Registration Books
in the name of Cede & Co., as nominee of DTC, but may be registered in the name of the
successor securities depository, or its nominee, or in whatever name or names Bondholders
transferring or exchanging Bonds shall designate, in accordance with the provisions of this
Resolution.
0) Payments to Cede & Co. Notwithstanding any other provision of this Resolution
to the contrary, so long as any Bond is registered in the name of Cede & Co., as nominee of
DTC, all payments with respect to principal of, premium, if any, and interest on such Bond and
all notices with respect to such Bond shall be made and given, respectively, in the manner
provided in the representation letter of the Board to DTC.
(k) Notice of Redemption. In addition to the method of providing a notice of
redemption set forth in the FORM OF BONDS, the Paying Agent/Registrar shall give notice of
redemption of Bonds at least thirty (30) days prior to a redemption date to each registered
securities depository and to any national information service that disseminates redemption
notices. In addition, in the event of a redemption caused by an advance refunding of the Bonds,
the Paying Agent/Registrar shall send a second notice of redemption to the persons specified in
the immediately preceding sentence at least thirty (30) days but not more than ninety (90) days
prior to the actual redemption date. The Paying Agent/Registrar shall also send a notice of
prepayment or redemption to the registered owner of any Bond who has not sent the Bonds in for
redemption sixty (60) days after the redemption date.
Each notice of redemption, whether required in the FORM OF BONDS or in this Section,
shall contain a description of the Bonds to be redeemed including the complete name of the
Bonds, the Series, the date of issue, the interest rate, the maturity date, the CUSIP number, a
reference to the principal amounts of each maturity called for redemption, the mailing date for
18
the notice, the date of redemption, the redemption price, the name of the Paying Agent/Registrar
and the address at which the Bonds may be redeemed, including a contact person and telephone
number.
All redemption payments made by the Paying Agent/Registrar to the registered owners of
the Bonds shall include a CUSIP number relating to each amount paid to such registered owner.
Section 13. FORM OF BONDS. The forms of the Bonds, including the form of the
Authentication Certificate, the form of Assignment, the form of any statement of insurance
provided by the municipal bond insurer in the event insurance is obtained on any of the Bonds,
and the form of Registration Certificate of the Comptroller of Public Accounts of the State of
Texas, with respect to the Bonds initially issued and delivered to the Underwriters pursuant to
this Resolution, shall be, respectively, substantially as set forth in Exhibit B. with such
appropriate variations, omissions, or insertions as are permitted or required by this Resolution.
Section 14. INDIVIDUALS NOT LIABLE. All covenants, stipulations, obligations,
and agreements of the Board contained in this Resolution shall be deemed to be covenants,
stipulations, obligations, and agreements of the Financing System and the Board to the full extent
authorized or permitted by the Constitution and laws of the State of Texas. The Authority agrees
that all covenants, stipulations, obligations, and agreements of the Board contained in this
Resolution shall apply equally to the Authority acting in its capacity as the issuer of the Bonds
on behalf of the University. No covenant, stipulation, obligation, or agreement herein contained
shall be deemed to be a covenant, stipulation, obligation, or agreement of any member of either
the Authority or the Board or agent or employee of either the Authority or the Board in the
individual capacity thereof and neither the respective members of the Authority or the Board, nor
any officer thereof or of any participant shall be liable personally on Parity Obligations when
issued, or be subject to any personal liability or accountability by reason of the issuance thereof.
Section 15. SECURITY FOR THE BONDS. The Bonds are special obligations of
the Board payable from and secured solely by the Pledged Revenues pursuant to this Resolution.
The Pledged Revenues are hereby pledged, subject to the liens securing the Prior Encumbered
Obligations, to the payment of the principal of, premium, if any, and interest on the Bonds as the
same shall become due and payable. The Board agrees to pay the principal of, premium, if any,
and the interest on the Bonds when due, whether by reason of maturity or redemption.
Section 16. PAYMENTS. Semiannually on or before each principal or interest
payment date while any of the Bonds are outstanding and unpaid, commencing on the first
interest payment date for the Bonds as provided in Schedule I attached to this Resolution, the
Board shall make available to the Paying Agent/Registrar, money sufficient to pay such interest
on and such principal of the Bonds as will accrue or mature, or be subject to mandatory
redemption prior to maturity, on such principal, redemption, or interest payment date. The
Paying Agent/Registrar shall cancel all paid Bonds and shall furnish the Board with an
appropriate certificate of cancellation.
Section 17. DAMAGED, MUTILATED, LOST, STOLEN, OR DESTROYED
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BONDS, (a) Replacement Bonds. In the event any outstanding Bond is damaged, mutilated,
lost, stolen, or destroyed, the Paying Agent/Registrar shall cause to be printed, executed, and
delivered, a new bond of the same Series, principal amount, maturity, and interest rate, and in the
same form, as the damaged, mutilated, lost, stolen, or destroyed Bond, in replacement for such
Bond in the manner hereinafter provided.
(b) Application for Replacement Bonds. Application for replacement of damaged,
mutilated, lost, stolen, or destroyed Bonds shall be made to the Paying Agent/Registrar. In every
case of loss, theft, or destruction of a Bond, the applicant for a replacement bond shall furnish to
the Authority, the Board and the Paying Agent/Registrar such security or indemnity as may be
required by them to save each of them harmless from any loss or damage with respect thereto.
Also, in every case of loss, theft, or destruction of a Bond, the applicant shall furnish to the
Authority, the Board and the Paying Agent/Registrar evidence to their satisfaction of the loss,
theft, or destruction of such Bond, as the case may be. In every case of damage or mutilation of
a Bond, the applicant shall surrender to the Paying Agent/Registrar for cancellation the Bond so
damaged or mutilated.
(c) Payment in Lieu of Replacement. Notwithstanding the foregoing provisions of
this Section, in the event any such Bond shall have matured, and no default has occurred which
is then continuing in the payment of the principal of, redemption premium, if any, or interest on
the Bond, the Board, or the Authority acting on behalf of the Board, may authorize the payment
of the same (without surrender thereof except in the case of a damaged or mutilated Bond)
instead of issuing a replacement Bond, provided security or indemnity is furnished as above
provided in this Section.
(d) Charge for Issuing Replacement Bonds. Prior to the issuance of any
replacement bond, the Paying Agent/Registrar shall charge the owner of such Bond with all
legal, printing, and other expenses in connection therewith. Every replacement bond issued
pursuant to the provisions of this Section by virtue of the fact that any Bond is lost, stolen, or
destroyed shall constitute a contractual obligation of the Board whether or not the lost, stolen, or
destroyed Bond shall be found at any time, or be enforceable by anyone, and shall be entitled to
all the benefits of this Resolution equally and proportionately with any and all other Bonds duly
issued under this Resolution.
(e) Authority for Issuing Replacement Bonds. In accordance with Chapter 1206,
Texas Government Code, this Section shall constitute authority for the issuance of any such
replacement bond without the necessity of further action by the Authority, the Board or any other
body or person, and the duty of the replacement of such Bonds is hereby authorized and imposed
upon the Paying Agent/Registrar, and the Paying Agent/Registrar shall authenticate and deliver
such Bonds in the form and manner and with the effect, as provided in Section 12(f) of this
Resolution for Bonds issued in exchange and replacement for other Bonds.
Section 18. REMEDIES. Any owner of Parity Obligations in the event of default in
connection with any covenant contained herein or in any resolution adopted hereafter authorizing
the issuance of Parity Obligations, or default in the payment of said obligations, or of any interest
20
due thereon, or other costs and expenses related thereto, may require the Authority, the Board,
their respective officials and employees, and any appropriate official of the State of Texas, to
carry out, respect, or enforce the covenants and obligations of this Resolution by all legal and
equitable means, including specifically, but without limitation, the use and filing of mandamus
proceedings in any court of competent jurisdiction against the Authority, the Board, their
respective officials and employees, or any appropriate official of the State of Texas. Any delay
or omission to exercise any right or power accruing upon any default shall not impair any such
right or power nor be construed to be a waiver of any such default or acquiescence therein, and
every such right and power may be exercised from time to time and as often as may be deemed
expedient. Acceleration of the maturities of the Bonds shall not be an available remedy.
Section 19. DEFEASANCE OF OBLIGATIONS, (a) Any Bond and the interest
thereon shall be deemed to be paid, retired and no longer Outstanding (a "Defeased Bond")
within the meaning of this Resolution, except to the extent provided in subsections (c) and (e) of
this Section, when payment of the principal of such Bond, plus interest thereon to the due date or
dates (whether such due date or dates be by reason of maturity, upon redemption, or otherwise)
either: (i) shall have been made or caused to be made in accordance with the terms thereof
(including the giving of any required notice of redemption); or (ii) shall have been provided for
on or before such due date by irrevocably depositing with or making available to the Paying
Agent/Registrar for such payment: (1) lawful money of the United States of America sufficient
to make such payment; (2) Defeasance Securities, certified by an independent public accounting
firm of national reputation to mature as to principal and interest in such amounts and at such
times as will ensure the availability, without reinvestment, of sufficient money to provide for
such payment and when proper arrangements have been made by the Authority with the Paying
Agent/Registrar for the payment of its services until all Defeased Bonds shall have become due
and payable; or (3) any combination of (1) and (2). At such time as a Bond shall be deemed to
be a Defeased Bond hereunder, as aforesaid, such Bond and the interest thereon shall no longer
be secured by, payable from, or entitled to the benefits of, the revenues herein pledged as
provided in this Resolution, and such principal and interest shall be payable solely from such
money or Defeasance Securities.
(b) The deposit under clause (ii) of subsection (a) shall be deemed a payment of a
Bond as aforesaid when proper notice of redemption of such Bonds shall have been given, in
accordance with this Resolution. Any money so deposited with the Paying Agent/Registrar as
provided in this Section may at the written discretion of the Authority also be invested in
Defeasance Securities, maturing in the amounts and at the times as hereinbefore set forth, and all
income from all Defeasance Securities in possession of the Paying Agent/Registrar pursuant to
this Section which is not required for the payment of such Bond and premium, if any, and
interest thereon with respect to which such money has been so deposited, shall be turned over to
the Authority.
(c) Notwithstanding any provision of any other Section of this Resolution which may
be contrary to the provisions of this Section, all money or Defeasance Securities set aside and
held in trust pursuant to the provisions of this Section for the payment of principal of the Bonds
and premium, if any, and interest thereon, shall be applied to and used solely for the payment of
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the particular Bonds and premium, if any, and interest thereon, with respect to which such money
or Defeasance Securities have been so set aside in trust. Until all Defeased Bonds shall have
become due and payable, the Paying Agent/Registrar shall perform the services of Paying
Agent/Registrar for such Defeased Bonds the same as if they had not been defeased, and the
Authority shall make proper arrangements to provide and pay for such services as required by
this Resolution.
(d) Notwithstanding anything elsewhere in this Resolution, if money or Defeasance
Securities have been deposited or set aside with the Paying Agent/Registrar pursuant to this
Section for the payment of Bonds and such Bonds shall not have in fact been actually paid in
full, no amendment of the provisions of this Section shall be made without the consent of the
registered owner of each Bond affected thereby.
(e) Notwithstanding the provisions of subsection (a) immediately above, to the extent
that, upon the defeasance of any Defeased Bond to be paid at its maturity, the Authority retains
the right under Texas law to later call that Defeased Bond for redemption in accordance with the
provisions of the resolution authorizing its issuance, the Authority may call such Defeased Bond
for redemption upon complying with the provisions of Texas law and upon the satisfaction of the
provisions of subsection (a) immediately above with respect to such Defeased Bond as though it
was being defeased at the time of the exercise of the option to redeem the Defeased Bond and the
effect of the redemption is taken into account in determining the sufficiency of the provisions
made for the payment of the Defeased Bond.
(f) In the event that the Authority elects to defease less than all of the principal
amount of Bonds of a maturity, the Paying Agent/Registrar shall select, or cause to be selected,
such amount of Bonds by such random method as it deems fair and appropriate.
Section 20. AMENDMENT OF RESOLUTION, (a) Amendment Without Consent.
This Resolution and the rights and obligations of the Authority, the Board and of the owners of
the Outstanding Parity Obligations may be modified or amended at any time without notice to or
the consent of any owner of the Outstanding Parity Obligations, solely for any one or more of the
following purposes:
(i) To add to the covenants and agreements of the Board or the Authority
contained in this Resolution, other covenants and agreements thereafter to be observed, or
to surrender any right or power reserved to or conferred upon the Board or the Authority
in this Resolution;
(ii) To cure any ambiguity or inconsistency, or to cure or correct any defective
provisions contained in this Resolution, upon receipt by the Board and the Authority of
an opinion of Bond Counsel, that the same is needed for such purpose, and will more
clearly express the intent of this Resolution;
(iii) To supplement the security for the Parity Obligations, including, but not
by way of limitation, to provide for the addition of new institutions and agencies to the
22
Financing System or to clarify the provisions regarding the University as a Participant in
the Financing System; provided, however, if the definition of Pledged Revenues is
amended in any manner which results in the pledge of additional resources, the terms of
such amendment may limit the amount of such additional pledge and the manner, extent,
and duration of such additional pledge all as set forth in such amendment;
(iv) To make any changes or amendments requested by any bond rating
agency then rating or requested to rate Parity Obligations, as a condition to the issuance
or maintenance of a rating, which changes or amendments do not, in the judgment of the
Board and the Authority, materially adversely affect the interests of the owners of the
Outstanding Parity Obligations;
(v) To make such changes, modifications or amendments as may be necessary
or desirable, which shall not adversely affect the interests of the owners of the
Outstanding Parity Obligations, in order, to the extent permitted by law, to facilitate the
economic and practical utilization of Credit Agreements with respect to the Parity
Obligations;
(vi) To make such other changes in the provisions hereof as the Board and the
Authority may deem necessary or desirable and which shall not, in the judgment of the
Board and the Authority, materially adversely affect the interests of the owners of
Outstanding Parity Obligations; or
(vii) To make such changes or amendments as contemplated by Section
24(c)(v) of this Resolution in order to comply with the Rule.
Notice of any such amendment may be published by the Board in the manner described in
subsection (c) of this Section; provided, however, that the publication of such notice shall not
constitute a condition precedent to the adoption of such amendatory resolution and the failure to
publish such notice shall not adversely affect the implementation of such amendment as adopted
pursuant to such amendatory resolution.
(b) Amendments With Consent. Subject to the other provisions of this Resolution,
the owners of Outstanding Parity Obligations aggregating a majority in Outstanding Principal
Amount shall have the right from time to time to approve any amendment to this Resolution,
other than amendments described in subsection (a) of this Section, which may be deemed
necessary or desirable by the Board and the Authority; provided, however, that nothing herein
contained shall permit or be construed to permit, without the approval of the owners of all of the
Outstanding Parity Obligations, the amendment of the terms and conditions in this Resolution so
as to:
(1) Grant to the owners of any Outstanding Parity Obligations a priority over the
owners of any other Outstanding Parity Obligations;
(2) Materially adversely affect the rights of the owners of less than all Parity
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Obligations then Outstanding;
(3) Change the minimum percentage of the Outstanding Principal Amount necessary
for consent to such amendment;
(4) Make any change in the maturity of the Outstanding Bonds;
(5) Reduce the rate of interest borne by Outstanding Bonds;
(6) Reduce the amount of the principal payable on Outstanding Bonds;
(7) Modify the terms of payment of principal of or interest on the Outstanding Bonds,
or impose any conditions with respect to such payment; or
(8) Adversely affect the tax exempt status of the interest on the Outstanding Bonds to
the owners thereof.
(c) Notice. If at any time this Resolution is to be amended pursuant to the provisions
of subsection (b) of this Section, the Board shall cause notice of the proposed amendment to be
published in a financial newspaper or journal of general circulation in The City of New York,
New York, once during each calendar week for at least two successive calendar weeks. Such
notice shall briefly set forth the nature of the proposed amendment and shall state that a copy
thereof is on file at the principal office of each Registrar for the Parity Obligations for inspection
by all owners of Parity Obligations. Such publication is not required, however, if the Board
gives or causes to be given such notice in writing, by certified mail, to each owner of Parity
Obligations. Such publication is not required with respect to amendments to this Resolution
effected pursuant to the provisions of subsection (a) of this Section.
(d) Receipt of Consents. Whenever at any time not less than thirty (30) days, and
within one year, from the date of the first publication of said notice or other service of written
notice of the proposed amendment the Board shall receive an instrument or instruments executed
by all of the owners or the owners of at least a majority in Outstanding Principal Amount, as
appropriate, which instrument or instruments shall refer to the proposed amendment described in
said notice and which specifically consent to and approve such amendment in substantially the
form of the copy thereof on file as aforesaid, the Board may adopt the amendatory resolution in
substantially the same form.
(e) Effect of Amendments. Upon the adoption of any resolution to amend this
Resolution pursuant to the provisions of this Section, this Resolution shall be deemed to be
amended in accordance with the amendatory resolution, and the respective rights, duties, and
obligations of the Board, the Authority and all the owners of then Outstanding Parity Obligations
and all future Parity Obligations shall thereafter be determined, exercised, and enforced under
this Resolution, as amended.
(f) Consent Irrevocable. Any consent given by any owner of Parity Obligations
24
pursuant to the provisions of this Section shall be irrevocable for a period of six months from the
date of the first publication or other service of the notice provided for in this Section, and shall
be conclusive and binding upon all future owners of the same Parity Obligations during such
period. Such consent may be revoked at any time after six months from the date of the first
publication of such notice by the owner who gave such consent, or by a successor in title, by
filing notice thereof with the Registrar for such Parity Obligations, the Authority and the Board,
but such revocation shall not be effective if the owners of a majority in Outstanding Principal
Amount, prior to the attempted revocation, consented to and approved the amendment.
(g) Ownership. For the purpose of this Section, the ownership and other matters
relating to all Parity Obligations shall be determined by the Registration Books maintained by
the Registrar.
Section 21. COVENANTS REGARDING TAX-EXEMPTION, (a) Covenants.
The Board and the Authority covenant to take any action necessary to assure, or refrain from any
action which would adversely affect, the treatment of the Bonds as obligations described in
section 103 of the Code, the interest on which is not includable in the "gross income" of the
holder for purposes of federal income taxation. The Authority understands, and the Board
agrees, that all costs associated with satisfying the below covenants including, but not by way of
limitation, the costs incurred in respect to compliance with clause (8) below, shall be borne by
the Board. In furtherance thereof, the Board and the Authority covenant as follows:
(1) to take any action to assure that no more than 10 percent of the proceeds
of the Bonds or the projects financed therewith (less amounts deposited to a reserve fund,
if any) are used for any "private business use," as defined in section 141(b)(6) of the
Code or, if more than 10 percent of the proceeds or the projects financed therewith are so
used, such amounts, whether or not received by the Board, with respect to such private
business use, do not, under the terms of this Resolution or any underlying arrangement,
directly or indirectly, secure or provide for the payment of more than 10 percent of the
debt service on the Bonds, in contravention of section 141(b)(2) of the Code;
(2) to take any action to assure that in the event that the "private business use"
described in subsection (1) hereof exceeds 5 percent of the proceeds of the Bonds or the
projects financed therewith (less amounts deposited into a reserve fund, if any) then the
amount in excess of 5 percent is used for a "private business use" which is "related" and
not "disproportionate," within the meaning of section 141(b)(3) of the Code, to the
governmental use;
(3) to take any action to assure that no amount which is greater than the lesser
of $5,000,000, or 5 percent of the proceeds of the Bonds (less amounts deposited into a
reserve fund, if any) is directly or indirectly used to finance loans to persons, other than
state or local governmental units, in contravention of section 141(c) of the Code;
(4) to refrain from taking any action which would otherwise result in the
Bonds being treated as "private activity bonds" within the meaning of section 141 (b) of
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the Code;
(5) to refrain from taking any action that would result in the Bonds being
"federally guaranteed" within the meaning of section 149(b) of the Code;
(6) to refrain from using any portion of the proceeds of the Bonds, directly or
indirectly, to acquire or to replace funds which were used, directly or indirectly, to
acquire investment property (as defined in section 148(b)(2) of the Code) which produces
a materially higher yield over the term of the Bonds, other than investment property
acquired with -
(A) proceeds of the Bonds invested for a reasonable temporary
period of 3 years or less or, in the case of a refunding bond, for a period of 30
days or less until such proceeds are needed for the purpose for which the Bonds
are issued,
(B) amounts invested in a bona fide debt service fund, within
the meaning of section 1.148-1 (b) of the Treasury Regulations, and
(C) amounts deposited in any reasonably required reserve or
replacement fund to the extent such amounts do not exceed 10 percent of the
proceeds of the Bonds;
(7) to otherwise restrict the use of the proceeds of the Bonds or amounts
treated as proceeds of the Bonds, as may be necessary, so that the Bonds do not otherwise
contravene the requirements of section 148 of the Code (relating to arbitrage) and, to the
extent applicable, section 149(d) of the Code (relating to advance refundings); and
(8) to pay to the United States of America at least once during each five-year
period (beginning on the date of delivery of the Bonds) an amount that is at least equal to
90 percent of the "Excess Earnings," within the meaning of section 148(f) of the Code
and to pay to the United States of America, not later than 60 days after the Bonds have
been paid in full, 100 percent of the amount then required to be paid as a result of Excess
Earnings under section 148(f) of the Code.
(b) Rebate Fund. In order to facilitate compliance with the above covenant (8), a
"Rebate Fund" is hereby established by the Board for the sole benefit of the United States of
America, and such fund shall not be subject to the claim of any other person, including without
limitation the registered owners of the Bonds. The Rebate Fund is established for the additional
purpose of compliance with section 148 of the Code. The Rebate Fund shall be maintained and
administered at the direction of the Board.
(c) Proceeds. The Board understands that the term "proceeds" includes "disposition
proceeds" as defined in the Treasury Regulations and, in the case of refunding bonds, transferred
proceeds (if any) and proceeds of the refunded bonds expended prior to the date of issuance of
26
the Bonds. It is the understanding of the Board that the covenants contained herein are intended
to assure compliance with the Code and any regulations or rulings promulgated by the U.S.
Department of the Treasury pursuant thereto. In the event that regulations or rulings are
hereafter promulgated which modify or expand provisions of the Code, as applicable to the
Bonds, the Board will not be required to comply with any covenant contained herein to the
extent that such failure to comply, in the opinion of nationally recognized bond counsel, will not
adversely affect the exemption from federal income taxation of interest on the Bonds under
section 103 of the Code. In the event that regulations or rulings are hereafter promulgated which
impose additional requirements which are applicable to the Bonds, the Board agrees to comply
with the additional requirements to the extent necessary, in the opinion of nationally recognized
bond counsel, to preserve the exemption from federal income taxation of interest on the Bonds
under section 103 of the Code. In furtherance of the foregoing, the Chair of the Board, the Chair
of the Authority, the Executive Director of the Authority, and the Designated Financial Officer
each may execute any documents, certificates or reports required by the Code and to make such
elections, on behalf of the Board, which may be permitted by the Code as are consistent with the
purpose for the issuance of the Bonds.
(d) Allocation Of, and Limitation On, Expenditures for the Project. The Board
covenants to account for on its books and records the expenditure of proceeds from the sale of
the Bonds and any investment earnings thereon to be used for the purposes described in Section
9 of this Resolution (the "Project") in accordance with the requirements of the Code. The Board
recognizes that in order for the proceeds to be considered used for the reimbursement of costs,
the proceeds must be allocated to expenditures within 18 months of the later of the date that: (1)
the expenditure on a Project is made; or (2) each such Project is completed; but in no event later
than three years after the date on which the original expenditure is paid. The foregoing
notwithstanding, the Board recognizes that in order for proceeds to be expended under the Code,
the sale proceeds or investment earnings must be expended no more than 60 days after the earlier
of: (1) the fifth anniversary of the date of delivery of the Bonds; or (2) the date the Bonds are
retired. The Board agrees to obtain the advise of nationally-recognized bond counsel if such
expenditure fails to comply with the foregoing to assure that such expenditure will not adversely
affect the tax-exempt status of the Bonds. For purposes of this subsection, the Board shall not be
obligated to comply with this covenant if it obtains an opinion of nationally-recognized bond
counsel to the effect that such failure to comply will not adversely affect the excludability for
federal income tax purposes from gross income of the interest. The Board shall notify the
Authority in writing promptly after it receives or is made aware of any such opinion.
(e) Disposition of Project. The Board covenants that the property constituting a
Project will not be sold or otherwise disposed in a transaction resulting in the receipt by the
Board of cash or other compensation, unless the Board obtains an opinion of nationally-recognized
bond counsel substantially to the effect that such sale or other disposition will not
adversely affect the tax-exempt status of the Bonds. For purposes of this subsection, the Board
shall not be obligated to comply with this covenant if it obtains an opinion of nationally-recognized
bond counsel to the effect that such failure to comply will not adversely affect the
excludability for federal income tax purposes from gross income of the interest. The Board shall
notify the Authority in writing promptly after it receives or is made aware of any such opinion.
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Section 22. PRIOR REDEMPTION. Optional Redemption. The Bonds shall be
subject to redemption prior to maturity, at the option of the Authority, on the dates and terms
specified in Schedule I attached to this Resolution, in whole or in part (but if less than all the
Bonds of a single maturity are called for redemption, those bonds called shall be selected by lot
or other customary random method by the Paying Agent/Registrar), for a redemption price equal
to the principal amount to be redeemed plus accrued interest to the date fixed for redemption.
Section 23. OTHER REPRESENTATION AND COVENANTS. The Authority
and the Board further covenant or warrant as follows:
(a) The Authority is a duly organized and existing political subdivision of the State of
Texas under the Constitution and laws of the State of Texas.
(b) The Authority is duly authorized under the laws of the State of Texas to issue the
Bonds; all action on its part of the creation and issuance of the Bonds has been duly and
effectively taken; and the Bonds in the hands of the Holders thereof are and will be valid and
enforceable obligations of the Authority in accordance with their terms.
(c) The Bonds upon issuance and approval by the Attorney General of the State of
Texas will be legal, valid and binding obligations of the Authority, subject to bankruptcy,
insolvency, or other laws affecting creditors; rights generally and as may be affected by matters
involving the exercise of equitable or judicial discretion.
(d) The Bonds and Bond documents do not conflict with other agreements or
obligations binding on the University.
(e) No litigation is pending that would adversely affect the financial condition of the
Authority, and no litigation of any nature has been filed or is now pending to restrain or enjoin
the issuance or delivery of the Bonds, that would affect the provisions made for the payment or
security of the Bonds, or that in any manner questions the proceedings or authority concerning
the issuance of the Bonds.
(f) There has been no default or non-appropriation of any obligations of the
Authority.
Section 24. CONTINUING DISCLOSURE, (a) Annual Reports, (i) The Board
shall provide annually to each NRMSIR and any SID, within six months after the end of each
fiscal year ending in or after 2008, financial information and operating data of the general type
included in the final Official Statement authorized by Section 10 hereof, being the information
described in Exhibit C hereto. Any financial statements so to be provided shall be prepared in
accordance with the accounting principles described in Exhibit C hereto, or such other
accounting principles as the Board may be required to employ from time to time pursuant to state
law or regulation. If the Board commissions an audit of such statements and the audit is
completed within the period during which they must be provided, a copy of such audit also shall
28
be provided in accordance with the Rule. If any such audit commissioned by the Board of such
financial statements is not complete within such period, then the Board shall provide unaudited
financial statements and audited financial statements for the applicable fiscal year to each
NRMSIR and any SID, when and if the audit report on such statements become available.
(ii) If the Board changes the fiscal year of the University, it will notify each NRMSIR
and any SID of the change (and of the date of the new fiscal year end) prior to the next date by
which the Board otherwise would be required to provide financial information and operating data
pursuant to this Section. The financial information and operating data to be provided pursuant to
this Section may be set forth in full in one or more documents or may be included by specific
reference to any document (including an official statement or other offering document, if it is
available from the MSRB) that theretofore has been provided to each NRMSIR and any SID or
filed with the SEC.
(b) Material Event Notices. The Board shall notify any SID and either each NRMSIR or
the MSRB, in a timely manner, of any of the following events with respect to the Bonds, if such
event is material within the meaning of the federal securities laws:
1. Principal and interest payment delinquencies;
2. Non-payment related defaults;
3. Unscheduled draws on debt service reserves reflecting financial difficulties;
4. Unscheduled draws on credit enhancements reflecting financial difficulties;
5. Substitution of credit or liquidity providers, or their failure to perform;
6. Adverse tax opinions or events affecting the tax-exempt status of the Bonds;
7. Modifications to rights of holders of the Bonds;
8. Bond calls;
9. Defeasances;
10. Release, substitution, or sale of property securing repayment of the Bonds; and
11. Rating changes.
The Board shall notify any SID and either each NRMSIR or the MSRB, in a timely manner, of
any failure by the Board to provide financial information or operating data in accordance with
subsection (a) of this Section by the time required by such subsection.
(c) Limitations, Disclaimers, and Amendments, (i) The Board shall be obligated to
observe and perform the covenants specified in this Section for so long as, but only for so long
as, the Board remains an "obligated person" with respect to the Bonds within the meaning of the
Rule, except that the Board in any event will give notice of any deposit made in accordance with
this Resolution or applicable law that causes the Bonds no longer to be Outstanding.
(ii) The provisions of this Section are for the sole benefit of the registered owners and
beneficial owners of the Bonds, and nothing in this Section, express or implied, shall give any
benefit or any legal or equitable right, remedy, or claim hereunder to any other person. The
Board undertakes to provide only the financial information, operating data, financial statements,
and notices which it has expressly agreed to provide pursuant to this Section and does not hereby
29
70169362.2/10718173
undertake to provide any other information that may be relevant or material to a complete
presentation of the Board's financial results, condition, or prospects or hereby undertake to
update any information provided in accordance with this Section or otherwise, except as
expressly provided herein. The Board does not make any representation or warranty concerning
such information or its usefulness to a decision to invest in or sell Bonds at any future date.
(iii) UNDER NO CIRCUMSTANCES SHALL THE BOARD BE LIABLE TO THE
REGISTERED OWNER OR BENEFICIAL OWNER OF ANY BOND OR ANY OTHER
PERSON, IN CONTRACT OR TORT, FOR DAMAGES RESULTING IN WHOLE OR IN
PART FROM ANY BREACH BY THE BOARD WHETHER NEGLIGENT OR WITHOUT
FAULT ON ITS PART, OF ANY COVENANT SPECIFIED IN THIS SECTION, BUT EVERY
RIGHT AND REMEDY OF ANY SUCH PERSON, IN CONTRACT OR TORT, FOR OR ON
ACCOUNT OF ANY SUCH BREACH SHALL BE LIMITED TO AN ACTION FOR
MANDAMUS OR SPECIFIC PERFORMANCE.
(iv) No default by the Board in observing or performing its obligations under this
Section shall comprise a breach of or default under the Resolution for purposes of any other
provision of this Resolution. Nothing in this Section is intended or shall act to disclaim, waive,
or otherwise limit the duties of the Board under federal and state securities laws.
(v) The provisions of this Section may be amended by the Board from time to time to
adapt to changed circumstances that arise from a change in legal requirements, a change in law,
or a change in the identity, nature, status, or type of operations of the Board, but only if: (1) the
provisions of this Section, as so amended, would have permitted an underwriter to purchase or
sell Bonds in the primary offering of the Bonds in compliance with the Rule, taking into account
any amendments or interpretations of the Rule since such offering as well as such changed
circumstances and; (2) either: (A) the registered owners of a majority in aggregate principal
amount (or any greater amount required by any other provision of this Resolution that authorizes
such an amendment) of the Outstanding Bonds consent to such amendment; or (B) a person that
is unaffiliated with the Board (such as nationally recognized bond counsel) determined that such
amendment will not materially impair the interest of the registered owners and beneficial owners
of the Bonds. If the Board so amends the provisions of this Section, it shall include with any
amended financial information or operating data next provided in accordance with subsection (a)
of this Section an explanation, in narrative form, of the reason for the amendment and of the
impact of any change in the type of financial information or operating data so provided. The
Board may also amend or repeal the provisions of this continuing disclosure agreement if the
SEC amends or repeals the applicable provision of the Rule or a court of final jurisdiction enters
judgment that such provisions of the Rule are invalid, but only if and to the extent that the
provisions of this sentence would not prevent an underwriter from lawfully purchasing or selling
Bonds in the primary offering of the Bonds.
Section 25. RESOLUTION TO CONSTITUTE A CONTRACT; EQUAL
SECURITY. In consideration of the acceptance of the Bonds, the issuance of which is
authorized hereunder, by those who shall hold the same from time to time, this Resolution shall
be deemed to be and shall constitute a contract between the Authority, the Board and the Holders
30
from time to time of the Bonds and the pledge made in this Resolution by the Board and the
covenants and agreements set forth in this Resolution to be performed by the Authority and the
Board shall be for the equal and proportionate benefit, security, and protection of all Holders,
without preference, priority, or distinction as to security or otherwise of any of the Bonds
authorized hereunder over any of the others by reason of time of issuance, sale, or maturity
thereof or otherwise for any cause whatsoever, except as expressly provided in or permitted by
this Resolution.
Section 26. SEVERABILITY OF INVALID PROVISIONS. If any one or more of
the covenants, agreements, or provisions herein contained shall be held contrary to any express
provisions of law or contrary to the policy of express law, though not expressly prohibited, or
against public policy, or shall for any reason whatsoever be held invalid, then such covenants,
agreements, or provisions shall be null and void and shall be deemed separable from the
remaining covenants, agreements, or provisions and shall in no way affect the validity of any of
the other provisions hereof or of the Bonds issued hereunder.
Section 27. PAYMENT AND PERFORMANCE ON BUSINESS DAYS. Except
as provided to the contrary in the FORM OF BONDS, whenever under the terms of this
Resolution or the Bonds, the performance date of any provision hereof or thereof, including the
payment of principal of or interest on the Bonds, shall occur on a day other than a Business Day,
then the performance thereof, including the payment of principal of and interest on the Bonds,
need not be made on such day but may be performed or paid, as the case may be, on the next
succeeding Business Day with the same force and effect as if made on the date of performance or
payment.
Section 28. LIMITATION OF BENEFITS WITH RESPECT TO THE
RESOLUTION. With the exception of the rights or benefits herein expressly conferred,
nothing expressed or contained herein or implied from the provisions of this Resolution or the
Bonds is intended or should be construed to confer upon or give to any person other than the
Authority, the Board, the Holders, and the Paying Agent/Registrar, any legal or equitable right,
remedy, or claim under or by reason of or in respect to this Resolution or any covenant,
condition, stipulation, promise, agreement, or provision herein contained. This Resolution and
all of the covenants, conditions, stipulations, promises, agreements, and provisions hereof are
intended to be and shall be for and inure to the sole and exclusive benefit of the Authority, the
Board, the Holders, and the Paying Agent/Registrar as herein and therein provided.
Section 29. CUSTODY, APPROVAL, BOND COUNSEL'S OPINION, CUSIP
NUMBERS, PREAMBLE AND INSURANCE. The Executive Director of the Authority is
hereby authorized to have control of the Bonds issued hereunder and all necessary records and
proceedings pertaining to the Bonds pending their delivery and approval by the Attorney General
of the State of Texas. The Executive Director of the Authority is hereby authorized, to the extent
deemed necessary or advisable thereby, in the discretion thereof, to request that the Attorney
General approve the Bonds as permitted by Chapter 1202, in which case the Executive Director
of the Authority also is authorized to request the Comptroller of Public Accounts register the
Bonds, and to cause an appropriate legend reflecting such approval and registration to appear on
31
70169362.2/10718173
the Bonds and the substitute Bonds. The approving legal opinion of Bond Counsel and the
assigned CUSIP numbers may be printed on the Bonds and on any Bonds issued and delivered in
exchange or replacement of any Bond, but the presence or absence thereof shall not affect the
legality or enforceability of the Bonds, and shall be solely for the convenience and information
of the registered owners of the Bonds. The preamble to this Resolution is hereby adopted and
made a part of this Resolution for all purposes. If insurance is obtained on any of the Bonds, the
Bonds shall bear, as appropriate and applicable, a legend concerning insurance as provided by
the municipal bond insurance company issuing any such insurance.
Section 30. FURTHER PROCEDURES. The Chair of the Board, the Chair of the
Authority, the Executive Director of the Authority, the Designated Financial Officer, and all
other officers, employees, and agents of the Authority and the University, and each of them, shall
be and they are hereby expressly authorized, empowered, and directed from time to time and at
any time to do and perform all such acts and things and to execute, acknowledge, and deliver in
the name and under the corporate seal and on behalf of the Authority or the Board, as
appropriate, all such instruments, whether or not herein mentioned, as may be necessary or
desirable in order to carry out the terms and provisions of this Resolution, the Bonds, the sale
and delivery of the Bonds and fixing all details in connection therewith, and to approve any
Official Statement, or supplements thereto, in connection with the Bonds. The Designated
Financial Officer specifically is authorized to execute Schedule I attached to this Resolution for
the purposes described in Section 10(a) of this Resolution.
Section 31. REPEAL OF CONFLICTING RESOLUTIONS. All resolutions and
all parts of any resolutions which are in conflict or inconsistent with this Resolution are hereby
repealed and shall be of no further force or effect to the extent of such conflict or inconsistency.
Section 32. REFERENCES TO AUTHORITY. By operation of Texas law
including, but not by way of limitation, the TPFA Act and the Texas Education Code being
amended by the Texas legislature, should the Authority no longer be charged with the duty and
exclusive authority to act on behalf of the University in issuing bonds on its behalf, all references
to the Authority in this Resolution shall be null and void and of no effect. Furthermore, should
the Authority no longer be charged with the duty and exclusive authority to act on behalf of the
University in issuing bonds on its behalf, the Authority shall be deemed to have discharged all of
its duties and responsibilities to the University under this Resolution, and all such duties and
responsibilities shall be assumed by the University.
Section 33. PERFECTION OF PLEDGE. Chapter 1208, Government Code, applies
to the issuance of the Bonds and the pledge of the Pledged Revenues granted under Section 2 of
this Resolution, and such pledge is therefore valid, effective and perfected. If Texas law is
amended at any time while the Bonds are outstanding and unpaid such that the pledge of the
Pledged Revenues under Section 2 of this Resolution is to be subject to the filing requirements of
Chapter 9, Business & Commerce Code, then in order to preserve to the registered owners of the
Bonds the perfection of the security interest in said pledge, the Authority agrees to take such
measures as it determines are reasonable and necessary under Texas law to comply with the
applicable provisions of Chapter 9, Business & Commerce Code and enable a filing to perfect
32
the security interest in said pledge to occur.
Section 34. BOND INSURANCE. In the event the Bonds are qualified for municipal
bond insurance and the winning bidder for the Bonds wishes to purchase such municipal bond
insurance for the benefit of the holders of the Bonds, the cost thereof will be paid by the winning
bidder. The municipal bond insurer shall be deemed to be the sole holder of the Bonds insured
by it for the purpose of exercising any voting right or privilege or giving any consent or direction
or taking any other action that the holders of the Bonds insured by it are entitled to take pursuant
to Sections 18 and 20 of this Resolution. The Authority and the Board shall comply with the
provisions contained in the Commitment For Municipal Bond Insurance issued by
(and as set forth in Exhibit D hereto) as if such provisions were
set forth in this Resolution.
Section 35. PUBLIC NOTICE. It is hereby found and determined that each of the
officers and members of the Authority and the Board was duly and sufficiently notified officially
and personally, in advance, of the time, place, and purpose of their respective meetings at which
this Resolution was adopted, and that this Resolution would be introduced and considered for
adoption at said meetings; and that said meetings were open to the public, and public notice of
the time, place, and purpose of said meetings was given, all as required by Chapter 551, Texas
Government Code. In addition, the meeting of the Board was held as a telephone conference call
pursuant to Section 551.121, Texas Government Code, and that it was necessary to convene said
meeting immediately to finalize the terms and conditions relating to the sale of the Bonds at a
time when it was found to be difficult, and possibly impossible, to convene a quorum of the
Board in one location.
33
70169362.2/10718173
SCHEDULE I
$
Texas Public Finance Authority Stephen F. Austin State University
Revenue Financing System Revenue Bonds, Series 2008
Date of Bonds: March 4, 2008
Purchaser:
Price: $
Insurance:
Serial Bonds
Principal Maturity Interest
Amount April 15 Rate
2008
Interest on the Bonds will accrue from the date of the delivery to the Purchaser, and is
payable on April 15, 2008 and semiannually thereafter on October 15 and April 15 of each year
until maturity or prior redemption.
The Bonds maturing on and after October 15, 2018 may be redeemed prior to their
scheduled maturities, by the Authority at the option and direction of the University, on October
15, 2017, or on any date thereafter, at a redemption price equal to the principal amount to be
redeemed plus accrued interest from the most recent interest payment date to the date fixed for
redemption.
(Signature Page Follows)
70169362.2
APPROVED:
By:
Name Danny R. Gallant
Title: Interim Vice President for Finance
and Administration
70169362.2
EXHIBIT A
DEFINITIONS
As used in this Resolution the following terms and expressions shall have the meanings
set forth below, unless the text hereof specifically indicates otherwise:
"Annual Debt Service Requirements" means, for any Fiscal Year, the principal of and
interest on all Parity Obligations coming due at Maturity or Stated Maturity (or that could come
due on demand of the owner thereof other than by acceleration or other demand conditioned
upon default by the Board on such Debt, or be payable in respect of any required purchase of
such Debt by the Board) in such Fiscal Year, and, for such purposes, any one or more of the
following rules shall apply at the election of the Board:
(1) Committed Take Out. If the Board, or the Authority on behalf of the Board,
has entered into a Credit Agreement constituting a binding commitment within normal
commercial practice to discharge any of its Funded Debt at its Stated Maturity (or, if due
on demand, at any date on which demand may be made) or to purchase any of its Funded
Debt at any date on which such Debt is subject to required purchase, all under
arrangements whereby the obligation to repay the amounts advanced for such discharge
or purchase constitutes Funded Debt, then the portion of the Funded Debt committed to
be discharged or purchased shall be excluded from such calculation and the principal of
and interest on the Funded Debt incurred for such discharging or purchase that would be
due in the Fiscal Year for which the calculation is being made, if incurred at the Stated
Maturity or purchase date of the Funded Debt to be discharged or purchased, shall be
added;
(2) Balloon Debt. If the principal (including the accretion of interest resulting
from original issue discount or compounding of interest) of any series or issue of Funded
Debt due (or payable in respect of any required purchase of such Funded Debt by the
Board) in any Fiscal Year either is equal to at least 25% of the total principal (including
the accretion of interest resulting from original issue discount or compounding of
interest) of such Funded Debt or exceeds by more than 50% the greatest amount of
principal of such series or issue of Funded Debt due in any preceding or succeeding
Fiscal Year (such principal due in such Fiscal Year for such series or issue of Funded
Debt being referred to herein as "Balloon Debt"), the amount of principal of such Balloon
Debt taken into account during any Fiscal Year shall be equal to the debt service
calculated using the original principal amount of such Balloon Debt amortized over the
Term of Issue on a level debt service basis at an assumed interest rate equal to the rate
borne by such Balloon Debt on the date of calculation;
(3) Consent Sinking Fund. In the case of Balloon Debt (as defined in clause (2)
above), if a Designated Financial Officer shall deliver to the Board and the Authority an
Officer's Certificate providing for the retirement of (and the instrument creating such
A-l
70169362.2
Balloon Debt shall permit the retirement of), or for the accumulation of a sinking fund for
(and the instrument creating such Balloon Debt shall permit the accumulation of a
sinking fund for), such Balloon Debt according to a fixed schedule stated in such
Officer's Certificate ending on or before the Fiscal Year in which such principal (and
premium, if any) is due, then the principal of (and, in the case of retirement, or to the
extent provided for by the sinking fund accumulation, the premium, if any, and interest
and other debt service charges on) such Balloon Debt shall be computed as if the same
were due in accordance with such schedule, provided that this clause (3) shall apply only
to Balloon Debt for which the installments previously scheduled have been paid or
deposited to the sinking fund established with respect to such Debt on or before the times
required by such schedule; and provided further that this clause (3) shall not apply where
the Board has elected to apply the rule set forth in clause (2) above;
(4) Prepaid Debt. Principal of and interest on Parity Obligations, or portions
thereof, shall not be included in the computation of the Annual Debt Service
Requirements for any Fiscal Year for which such principal or interest are payable from
funds on deposit or set aside in trust for the payment thereof at the time of such
calculations (including without limitation capitalized interest and accrued interest so
deposited or set aside in trust) with a financial institution acting as fiduciary with respect
to the payment of such Debt;
(5) Variable Rate. As to any Parity Obligation that bears interest at a variable
interest rate which cannot be ascertained at the time of calculation of the Annual Debt
Service Requirement then, at the option of the Board, either: (1) an interest rate equal to
the average rate borne by such Parity Obligations (or by comparable debt in the event that
such Parity Obligations has not been outstanding during the preceding 24 months) for any
24 month period ending within 30 days prior to the date of calculation; or (2) an interest
rate equal to the 30-year Tax-Exempt Revenue Bond Index (as most recently published in
The Bond Buyer), shall be presumed to apply for all future dates, unless such index is no
longer published in The Bond Buyer, in which case an index of tax-exempt revenue
bonds with maturities of at least 20 years which is published in a newspaper or journal
with national circulation may be used for this purpose. If two Series of Parity
Obligations which bear interest at variable interest rates, or one or more maturities within
a Series, of equal par amounts, are issued simultaneously with inverse floating interest
rates providing a composite fixed interest rate for such Parity Obligations taken as a
whole, such composite fixed rate shall be used in determining the Annual Debt Service
Requirement with respect to such Parity Obligations;
(6) Guarantee. In the case of any guarantee, as described in clause (2) of the
definition of Debt, no obligation will be counted if the Board does not anticipate in its
annual budget that it will make any payments on the guarantee. If, however, the Board is
making payments on a guarantee or anticipates doing so in its annual budget, such
obligation shall be treated as Parity Obligations and calculations of Annual Debt Service
Requirements with respect to such guarantee shall be made assuming that the Board will
A-2
make all additional payments due under the guaranteed obligation. If the entity whose
obligation is guaranteed cures all defaults and the Board no longer anticipates making
payments under the guarantee, the guaranteed obligations shall not be included in the
calculation of Annual Debt Service Requirements;
(7) Commercial Paper. With respect to any Parity Obligations issued in the form
of commercial paper with maturities not exceeding 270 days, the interest on such Parity
Obligations shall be calculated in the manner provid

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Stephen F. Austin
State University
Minutes of the
Board of Regents
Nacogdoches, Texas
February 7,2008
Volume 242
BOARD MINUTES FOR FEBRUARY 7,2008
VOLUME 241
Board Order 08-15 Approval of Resolution Authorizing the Sale of the Texas
Public Finance Authority Stephen F. Austin State University
Tuition Revenue Bonds, Series 2008, in the Aggregate
Principal Amount of $20,175,000 for the Early Childhood
Research Development Center 2
Appendix Certificate of Resolution
Stephen F. Austin State University
Minutes of the Telephone Meeting
Board of Regents
Nacogdoches, Texas
February 7, 2008
Austin Building 307
A special teleconference meeting of the board of regents was called to order on Thursday,
February 7, 2008, at 1:00 p.m. by Chair Valerie Ertz.
Joining the meeting by telephone were:
Board Members: Ms. Valerie Ertz, Chair
Mr. Carlos Amaral
Mr. Richard Boyer
Mr. James Dickerson
Mr. Bob Garrett
Mr. Joe Max Green
Mr. Paul Pond
Mr. James Thompson
Mr. Melvin White
President: Dr. Baker Pattillo
Present in Austin Building, Room 307 were:
Vice President: Mr. Danny Gallant
General Counsel: Ms. Yvette Clark
Others SFA administrators, staff, and visitors
Danny Gallant introduced others joining by telephone: Kim Edwards, executive director,
and Judith Porras, general counsel, of the Texas Public Finance Authority; Tim Peterson,
representing First Southwest, financial advisor; and Lisa Adelman of Fulbright and
Jaworski, bond counsel. Kim Edwards explained that the bonds had been sold that
morning through a competitive bond opening. There were 12 bids; the winning bid had
been from Southwest Securities for 4.099632%. She congratulated the university staff for
the excellent job they had done in the conference call with the bond rating agencies. The
bonds received an A rating from Moody and an A+ from Fitch. The Fitch rating was
particularly significant because they removed a former "negative outlook" qualifier that
had been attached to the last bond sale in 2005.
Board Order 08-15
Whereas, the following was considered by the board of regents:
Consideration of Resolution Authorizing the Sale of the Texas Public
Finance Authority Stephen F. Austin State University Tuition Revenue
Bonds, Series 2008, in the Aggregate Principal Amount of $20,175,000;
Authorizing Actions by the Texas Public Finance Authority, Stephen F.
Austin State University, and Representatives thereof in Connection
with the Sale and Delivery of said Bonds; and Resolving Other Matters
Related Thereto.
Explanation:
The resolution authorizes the sale of bonds necessary to finance the tuition
revenue bond portion of the construction of the Education Research Center. Debt
is financed through the Stephen F. Austin State University Revenue Financing
System. Bond proceeds will be available March 4, 2008.
Therefore, upon motion by Regent Pond, seconded by Regent Amaral, with all members
voting aye, the resolution was passed authorizing the sale of bonds in the amount of
$20,175,000 to finance the tuition revenue bond portion of the construction of the Early
Childhood Research Development Center.
The meeting was adjourned at 1:06 p.m.
4
J
CERTIFICATE FOR RESOLUTION
THE STATE OF TEXAS §
STEPHEN F. AUSTIN STATE UNIVERSITY §
1, the undersigned officer of the Board of Regents of Stephen F. Austin State University, do
hereby certify as follows:
1. The Board of Regents of Stephen F. Austin State University convened in SPECIAL
MEETING ON THE 7TH DAY OF FEBRUARY, 2008, at the regular designated meeting place and
the roll was called of the duly constituted officers and members of said Board, to-wit:
and all of said persons were present, except the following absentees: None ,
* thus constituting a quorum. Whereupon, among other business, the following was transacted at said
-1 Meeting: a written
] RESOLUTION AUTHORIZING THE SALE OF THE TEXAS PUBLIC FINANCE
AUTHORITY STEPHEN F. AUSTIN STATE UNIVERSITY REVENUE
FINANCING SYSTEM REVENUE BONDS, SERIES 2008, IN THE AGGREGATE
! PRINCIPAL AMOUNT OF $20,175,000; AUTHORIZING ACTIONS BY THE
J TEXAS PUBLIC FINANCE AUTHORITY, STEPHEN F. AUSTIN STATE
UNIVERSITY, AND REPRESENTATIVES THEREOF IN CONNECTION WITH
; THE SALE AND DELIVERY OF SAID BONDS; AND RESOLVING OTHER
MATTERS RELATED THERETO
j was duly introduced for the consideration of the Board. It was then duly moved and seconded that
said Resolution be adopted; and, after due discussion, said motion, carrying with it the adoption of
1 said Resolution, prevailed and carried by the following vote:
AYES: 9 NOES: 0
70169350.1/10718173
2. That a true, full, and correct copy of the aforesaid Resolution adopted at the Meeting
described in the foregoing paragraph is attached to and follows this Certificate; that said Resolution
has been duly recorded in said Board's minutes of said Meeting; that the above and foregoing
paragraph is a true, full, and correct excerpt from said Board's minutes of said Meeting pertaining to
the adoption of said Resolution; that the persons named in the above and foregoing paragraph are the
duly chosen, qualified and acting officers and members of said Board as indicated therein; that each
of the officers and members of said Board was duly and sufficiently notified officially and
personally, in advance, of the time, place and purpose of the aforesaid Meeting, and that said
Resolution would be introduced and considered for adoption at said Meeting; and that said Meeting
was open to the public, and public notice of the time, place and purpose of said Meeting was given,
all as required by Chapter 551, Texas Government Code, as amended; and that the Meeting was held
as a telephone conference call pursuant to Section 551.121, Texas Government Code, and that it was
necessary to convene said Meeting immediately to finalize the terms and conditions relating to the
sale of the Bonds at a time when it was found difficult, and possibly impossible, to convene a
quorum of said Board in one location.
1 f I Ir-t^
J SIGNED AND SEALED this P^D I ^ , 2008-.
J
J
]
J
. . ™ y, Board of Regents
\ , . Stepnen F. Austin State University
i
70169350.1/10718173
RESOLUTION
AUTHORIZING THE SALE OF THE TEXAS PUBLIC
FINANCE AUTHORITY STEPHEN F. AUSTIN STATE
UNIVERSITY REVENUE FINANCING SYSTEM REVENUE
BONDS, SERIES 2008, IN THE AGGREGATE PRINCIPAL
AMOUNT OF $20,175,000; AUTHORIZING ACTIONS BY
THE TEXAS PUBLIC FINANCE AUTHORITY, STEPHEN
F. AUSTIN STATE UNIVERSITY, AND
REPRESENTATIVES THEREOF IN CONNECTION WITH
THE SALE AND DELIVERY OF SAID BONDS; AND
RESOLVING OTHER MATTERS RELATED THERETO
70169362.2/10718173
TABLE OF CONTENTS
Page
PREAMBLE 1
Section 1. REVENUE FINANCING SYSTEM AND ISSUANCE OF
PARITY OBLIGATIONS 4
Section 2. SECURITY AND PLEDGE 4
Section 3. COVENANTS RELATING TO PLEDGED REVENUES 5
Section 4. GENERAL COVENANTS 7
Section 5. ISSUANCE OF ADDITIONAL OBLIGATIONS 9
Section 6. DISPOSITION OF ASSETS ATTRIBUTABLE TO
FINANCING SYSTEM PARTICIPANTS 10
Section 7. COMBINATION, DIVISION, RELEASE AND ADMISSION
OF NEW INSTITUTIONS UNDER THE FINANCING SYSTEM.. 10
Section 8. WAIVER OF CERTAIN COVENANTS 11
Section 9. AMOUNT, PURPOSE, AND DESIGNATION OF THE BONDS.... 11
Section 10. DATE, DENOMINATIONS, NUMBERS, MATURITIES
AND TERMS OF BONDS 12
Section 11. INTEREST 14
Section 12. REGISTRATION, TRANSFER, AND EXCHANGE;
AUTHENTICATION; BOOK-ENTRY-ONLY SYSTEM 14
Section 13. FORM OF BONDS 19
Section 14. INDIVIDUALS NOT LIABLE 19
Section 15. SECURITY FOR THE BONDS 19
Section 16. PAYMENTS 19
Section 17. DAMAGED, MUTILATED, LOST, STOLEN, OR
DESTROYED BONDS 20
Section 18. REMEDIES 21
Section 19. DEFEASANCE OF OBLIGATIONS 21
Section 20. AMENDMENT OF RESOLUTION 22
Section 21. COVENANTS REGARDING TAX-EXEMPTION 25
Section 22. PRIOR REDEMPTION 28
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Section 23. OTHER REPRESENTATIONS AND COVENANTS 28
Section 24. CONTINUING DISCLOSURE 28
Section 25. RESOLUTION TO CONSTITUTE A CONTRACT;
EQUAL SECURITY 30
Section 26. SEVERABILITY OF INVALID PROVISIONS 31
Section 27. PAYMENT AND PERFORMANCE ON BUSINESS DAY 31
Section 28. LIMITATION OF BENEFITS WITH RESPECT TO
THE RESOLUTION 31
Section 29. CUSTODY, APPROVAL, BOND COUNSEL'S
OPINION, CUSIP NUMBERS, PREAMBLE AND INSURANCE.. 31
Section 30. FURTHER PROCEDURES 32
Section 31. REPEAL OF CONFLICTING RESOLUTIONS 32
Section 32. REFERENCES TO AUTHORITY 32
Section 33. PERFECTION OF PLEDGE 32
Section 34. BOND INSURANCE 33
Section 35. PUBLIC NOTICE 33
SCHEDULE I
EXHIBIT A DEFINITIONS A-l
EXHIBIT B FORM OF BONDS B-l
EXHIBIT C DESCRIPTION OF ANNUAL FINANCIAL INFORMATION C-l
EXHIBIT D MUNICIPAL BOND INSURANCE COMMITMENT D-l
70169362.2/10718173
RESOLUTION
AUTHORIZING THE SALE OF THE TEXAS PUBLIC
FINANCE AUTHORITY STEPHEN F. AUSTIN STATE
UNIVERSITY REVENUE FINANCING SYSTEM REVENUE
BONDS, SERIES 2008, IN THE AGGREGATE PRINCIPAL
AMOUNT OF $20,175,000; AUTHORIZING ACTIONS BY
THE TEXAS PUBLIC FINANCE AUTHORITY, STEPHEN
F. AUSTIN STATE UNIVERSITY, AND
REPRESENTATIVES THEREOF IN CONNECTION WITH
THE SALE AND DELIVERY OF SAID BONDS; AND
RESOLVING OTHER MATTERS RELATED THERETO
WHEREAS, in order to reduce costs, increase borrowing capacity, provide additional
security to the credit markets, and provide greater financial flexibility, the Board of Regents (the
"Board") of Stephen F. Austin State University (the "University") deemed it necessary and
desirable to establish a revenue financing program for revenue supported indebtedness to provide
funds to acquire, purchase, construct, improve, renovate, enlarge or equip property, buildings,
structures, facilities, roads, or related infrastructure at the University, as well as any institution,
branch or entity hereafter placed under the control and governance of the Board, to the extent
permitted by Chapter 55, Texas Education Code, including specifically, but not by way of
limitation, Section 55.02 thereof; and
WHEREAS, Section 55.13 of the Texas Education Code authorizes the issuance of
revenue bonds for the purpose of providing funds to acquire, purchase, construct, improve,
enlarge, and/or equip any property, buildings, structures, activities, services, operations, or other
facilities, for and on behalf of the University; and
WHEREAS, the University has the authority to pledge the Pledged Revenues pursuant to
Sections 55.13, 55.17, 54.520 and 54.5201 of the Texas Education Code, for the purpose of
paying principal and interest amounts due on revenue bonds issued for and behalf of the
University from time to time; and
WHEREAS, pursuant to Section 55.1758 of the Texas Education Code, the University is
authorized to acquire, purchase, construct, improve, renovate, enlarge, or equip an education
research facility and passed a resolution, on October 30, 2007, authorizing a request for
financing from the Texas Public Finance Authority (the "Authority") for financing such project;
and
WHEREAS, the Authority is a public authority and body politic and corporate duly
established and existing under the laws of the State of Texas, including particularly Chapter
1232, Texas Government Code (hereafter referred to as the "TPFA Act"); and
WHEREAS, Section 1232.101 of the TPFA Act recites that the Authority has the
exclusive authority to act on behalf of the University in issuing bonds on its behalf, and Section
55.13(c) of the Texas Education Code provides that the Authority shall exercise the authority of
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the Board to issue bonds on behalf of the University, in the manner provided by Subchapter B of
Chapter 55, Texas Education Code; and
WHEREAS, Section 55.13, Texas Education Code, recites that the Authority has all the
rights and duties granted or assigned to and is subject to the same conditions as the Board under
Chapter 55, Texas Education Code; and
WHEREAS, the resolution entitled "Resolution Authorizing the Sale of the Board of
Regents of Stephen F. Austin State University Revenue Financing System, Texas Public Finance
Authority Revenue Bonds, Series 1998, in an Aggregate Principal Amount Not to Exceed $6
Million; Authorizing Actions by the Texas Public Finance Authority, Stephen F. Austin State
University and Representatives Thereof in Connection with the Sale and Delivery of Said Bonds;
and Resolving Other Matters Related Thereto" (the "Underlying Resolution") was adopted by the
Board on July 14, 1998 and by the Authority on August 12, 1998; and
WHEREAS, the Underlying Resolution established the Stephen F. Austin State
University Revenue Financing System for the purpose of providing a financing structure for
revenue supported indebtedness at the University; and
WHEREAS, pursuant to the terms of the Underlying Resolution, the Authority delivered
its Stephen F. Austin State University Revenue Financing System Revenue Bonds, Series 1998,
in the aggregate principal amount of $6,000,000 (the "Series 1998 Bonds");
WHEREAS, pursuant to the terms of a resolution adopted in compliance with the
requirements of the Underlying Resolution by the Board on March 8, 2000, and by the Authority
on March 8, 2000, the Authority delivered its Stephen F. Austin State University Revenue
Financing System Revenue Bonds, Series 2000, in the aggregate principal amount of $7,000,000
(the "Series 2000 Bonds"); and
WHEREAS, pursuant to the terms of a resolution adopted in compliance with the
requirements of the Underlying Resolution by the Board on June 18, 2002, and by the Authority
on June 18, 2002, the Authority delivered its Stephen F. Austin State University Revenue
Financing System Revenue Bonds, Series 2002, in the aggregate principal amount of
$14,070,000 (the "Series 2002 Bonds"); and
WHEREAS, pursuant to the terms of a resolution adopted in compliance with the
requirements of the Underlying Resolution by the Board on November 19, 2002, and by the
Authority on November 19, 2002, the Authority delivered its Stephen F. Austin State University
Revenue Financing System Revenue Bonds, Series 2002A, in the aggregate principal amount of
$1,320,000 (the "Series 2002A Bonds"); and
WHEREAS, pursuant to the terms of a resolution adopted in compliance with the
requirements of the Underlying Resolution by the Board on February 18, 2004, and by the
Authority on February 18, 2004, the Authority delivered its Stephen F. Austin State University
Revenue Financing System Revenue Bonds, Series 2004, in the aggregate principal amount of
2
$26,030,000 (the "Series 2004 Bonds"); and
WHEREAS, pursuant to the terms of a resolution adopted in compliance with the
requirements of the Underlying Resolution by the Board on August 17, 2004, and by the
Authority on August 17, 2004, the Authority delivered its Stephen F. Austin State University
Revenue Financing System Revenue Bonds, Series 2004A, in the aggregate principal amount of
$5,460,000 (the "Series 2004A Bonds"); and
WHEREAS, pursuant to the terms of a resolution adopted in compliance with the
requirements of the Underlying Resolution by the Board on June 8, 2005, and by the Authority
on June 8, 2005, the Authority delivered its Stephen F. Austin State University Revenue
Financing System Revenue Bonds, Series 2005, in the aggregate principal amount of
$17,215,000 (the "Series 2005 Bonds"); and
WHEREAS, pursuant to the terms of a resolution adopted in compliance with the
requirements of the Underlying Resolution by the Board on October 19, 2005, and by the
Authority on October 6, 2005, the Authority delivered its Stephen F. Austin State University
Revenue Financing System Revenue Bonds, Series 2005A, in the aggregate principal amount of
$55,365,000 (the "Series 2005A Bonds", and collectively with the Series 1998 Bonds, the Series
2000 Bonds, the Series 2002 Bonds, the Series 2002A Bonds, the Series 2004 Bonds, the Series
2004A Bonds, and the Series 2005 Bonds, the "Previously Issued Parity Obligations"); and
WHEREAS, the Previously Issued Parity Obligations were secured by a lien on and
pledge of the "Pledged Revenues" (as defined in the Underlying Resolution), which lien and
pledge were made subject to the lien on and pledge of the "Prior Encumbered Revenues" (as
defined in the Underlying Resolution); and
WHEREAS, the Underlying Resolution permits the Authority, at the request of the
Board, to issue "Parity Obligations" secured by a lien on and pledge of the Pledged Revenues on
a parity with the Previously Issued Parity Obligations; and
WHEREAS, the Board has requested that the Authority issue bonds on behalf of the
University, pursuant to the authorization granted to the University by Subchapter B of Chapter
55 of the Texas Education Code, as Parity Obligations under the Underlying Resolution, and
further requests that the Authority adopt this Resolution in furtherance of such objective; and
WHEREAS, the Authority finds it necessary and advisable to adopt this Resolution, and
further acknowledges that by adopting this Resolution it will be bound by and agrees to follow
the covenants set forth in this Resolution in its capacity of effecting the sale of the bonds
hereinafter described on behalf of the University; and
WHEREAS, the Board finds it necessary and advisable to adopt this Resolution, and
further acknowledges that by adopting this Resolution it will be bound by and agrees to follow
the covenants set forth in this Resolution; and
70169362.2/10718173
WHEREAS, the terms used in this Resolution and not otherwise defined shall have the
meaning given in Exhibit A to this Resolution attached hereto and made a part hereof;
NOW THEREFORE, BE IT RESOLVED BY THE BOARD OF REGENTS OF
STEPHEN F. AUSTIN STATE UNIVERSITY:
NOW THEREFORE, BE IT RESOLVED BY THE BOARD OF DIRECTORS OF
THE TEXAS PUBLIC FINANCE AUTHORITY:
Section 1. REVENUE FINANCING SYSTEM AND ISSUANCE OF PARITY
OBLIGATIONS. In the Underlying Resolution, the Stephen F. Austin State University
Revenue Financing System (the "Financing System") has been established, for the purpose of
providing a financing structure for revenue supported indebtedness to provide funds to acquire,
purchase, construct, improve, renovate, enlarge or equip property, buildings, structures, facilities,
roads or related infrastructure at the University, as well as at any institution, branch or entity
hereafter placed under the control and governance of the Board, under authority of the pertinent
provisions of the Texas Education Code.
Section 2. SECURITY AND PLEDGE, (a) Pledge. Subject to the provisions of the
resolutions authorizing Prior Encumbered Obligations, Parity Obligations shall be secured by
and payable from a lien on the Pledged Revenues, and the Board hereby assigns and pledges the
Pledged Revenues to the payment of the principal of, premium, if any, and interest on Parity
Obligations, and the Pledged Revenues are further pledged to the establishment and maintenance
of any funds which may be provided to secure the repayment of Parity Obligations in accordance
with this Resolution. The Authority, upon approval and consent of the Board, may execute and
deliver one or more Credit Agreements to additionally secure Parity Obligations. Credit
Agreements may also be secured by a pledge of Pledged Revenues on a parity with or
subordinate to Parity Obligations.
(b) Additional Participants. As provided in Section 7 of this Resolution, institutions
which may hereafter come under the control and governance of the Board may become
Participants in the Financing System and such institutions may, at such time, have outstanding
obligations secured by the Prior Encumbered Revenues and that, therefore, the lien on and
pledge of the Pledged Revenues established pursuant to this Resolution and effective when such
institutions become Participants in the Financing System will be subject and subordinate only to
such institutions' outstanding Prior Encumbered Obligations.
(c) Restriction on Issuance of Additional Debt on a Parity with Prior Encumbered
Obligations. Except as provided in Section 4(g) and for so long as any Parity Obligations are
Outstanding, no additional bonds, notes, or other obligations may be issued or incurred by the
Board on a parity with any Prior Encumbered Obligations.
(d) Parity Obligations are Special Obligations. All Parity Obligations and the
premium, if any, and the interest thereon shall constitute special obligations of the Board payable
from the Pledged Revenues, and the owners thereof shall never have the right to demand
4
payment out of funds raised or to be raised by taxation, or from any source other than the source
specified in this Resolution. The obligation of the Board to pay or cause to be paid the amounts
payable under this Resolution out of the Pledged Revenues shall be absolute, irrevocable,
complete, and unconditional, and the amount, manner, and time of payment of such amounts
shall not be decreased, abated, rebated, set-off, reduced, abrogated, waived, diminished, or
otherwise modified in any manner or to any extent whatsoever, regardless of any right of setoff,
recoupment, or counterclaim that the Board might otherwise have against any owner or any other
party and regardless of any contingency, force majeure, event, or cause whatsoever and
notwithstanding any circumstance or occurrence that may arise or take place before, during, or
after the issuance of Parity Obligations while any Parity Obligations are Outstanding.
Section 3. COVENANTS RELATING TO PLEDGED REVENUES, (a) Rate
Covenant. In each Fiscal Year, the Board shall establish, charge, and use its reasonable efforts
to collect at each Participant the Pledged Revenues which, if collected, would be sufficient to
meet all financial obligations of the Board for such Fiscal Year relating to the Financing System
including all deposits or payments due on or with respect to: (i) the Prior Encumbered
Obligations; and (ii) all Outstanding Parity Obligations.
(b) Tuition. Subject to the provisions of the resolutions authorizing Prior
Encumbered Obligations and to the other provisions of this Resolution, the Board covenants and
agrees to fix, levy, charge and collect at each Participant student tuition charges required or
authorized by law to be imposed on students enrolled at each Participant (excepting, with respect
to each series or issue of Parity Obligations, any student in a category which, at the time of
adoption of a resolution relating to such Parity Obligations, is exempt by law or by the Board
from paying such tuition charges). Each student (excluding those exempt from payment as
provided above), enrolled at each Participant, respectively, at each regular fall and spring
semester and at each term of each summer session, shall pay tuition charges in such amounts,
without any limitation whatsoever, as will be sufficient at all times, together with other legally
available Hinds, including other Pledged Revenues, to provide the money to make or pay the
principal of, interest on, and other payments or deposits with respect to Outstanding Parity
Obligations when and as required. All changes in the tuition charged students at each Participant
shall be made by resolution of the Board, but such procedure shall not constitute or be regarded
as an amendment of this Resolution, but merely the carrying out of the provisions and
requirements hereof.
(c) Student Center Fees. Subject to the provisions of the resolution authorizing the
Series 2004 Bonds, the Board covenants and agrees to fix, levy, charge and collect student center
fees required or authorized by law to be imposed on students pursuant to Section 54.520 of the
Texas Education Code for the purpose of paying debt service on the Series 2004 Bonds;
provided however, that such student center fees shall be used only for the purpose of acquiring,
constructing, renovating, operating, maintaining, improving, equipping, and financing a
university center or additions to the center.
(d) Student Recreational Sport Fees. Subject to the provisions of the resolution
authorizing the Series 2005A Bonds, the Board covenants and agrees to fix, levy, charge and
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collect student recreational sport fees required or authorized by law to be imposed on students
pursuant to Section 54.5201 of the Texas Education Code for the purpose of paying debt service
on the Series 2005A Bonds; provided however, that such student recreational sport fees shall be
used only to purchase equipment for and to construct, operate, and maintain recreational sports
facilities and programs.
(e) Anticipated Deficit. If the Board determines, for any reason whatsoever, that
there are not anticipated to be legally available funds, including Pledged Revenues, sufficient to
meet all financial obligations of the Board relating to the Financing System including the
deposits and payments due on or with respect to Outstanding Parity Obligations as the same
mature or come due, or that any Participant in the Financing System will be unable to pay its
Annual Direct Obligation in full, then the Board shall fix, levy, charge, and collect such rentals,
rates, fees, tuition, or other charges at each Participant in the Financing System with enrolled
students, effective at the next succeeding regular semester or semesters or summer term or terms,
in such amounts, without any limitation whatsoever (other than as provided in subsection (f)
below), as will be at least sufficient to provide, together with other legally available funds,
including Pledged Revenues, the money for making when due all financial obligations of the
Board relating to the Financing System including all payments and deposits due on or with
respect to Outstanding Parity Obligations when and as required by this Resolution.
(f) Economic Effect of Adjustments. Any adjustments in the rate or manner of
charging for any rentals, rates, fees, tuition, or other charges included in Pledged Revenues at
any Participant in the Financing System resulting from an event described in subsection (e)
above will be based upon a certificate and recommendation of the Designated Financial Officer,
delivered to the Board, as to the rates and anticipated collection of the Pledged Revenues at each
Participant in the Financing System (after taking into account the anticipated effect the proposed
adjustments in such rentals, rates, fees, tuition, or other charges would have on enrollment and
the receipt of Pledged Revenues and other funds at each Participant in the Financing System)
which will be anticipated to result in: (i) Pledged Revenues attributable to each Participant being
sufficient (to the extent possible) to satisfy the Annual Obligation of such Participant; and (ii)
Pledged Revenues being sufficient, together with other legally available funds, to meet all
financial obligations of the Board relating to the Financing System including all deposits and
payments due on or with respect to: (A) the Prior Encumbered Obligations; and (B) all
Outstanding Parity Obligations, when and as required by this Resolution.
(g) Annual Obligation. If, in the judgment of the Board, any Participant in the
Financing System has been or will be unable to satisfy its Annual Obligation, the Board shall fix,
levy, charge, and collect rentals, rates, fees, and charges for goods and services furnished by such
Participant and, with respect to Participants with enrolled students, tuition, effective at the next
succeeding regular semester or semesters or summer term or terms, in amounts sufficient,
without limit (subject to the provisions of (f) above), together with other legally available funds,
including other Pledged Revenues attributable thereto, to enable it to make its Annual Obligation
payments.
(h) Additional Participants. The Board hereby agrees to apply the covenants
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hereinabove made to any institution, branch or entity hereinafter placed under the control and
governance of the Board and added as a Participant in the Financing System in accordance with
the provisions of Section 7 hereof.
Section 4. GENERAL COVENANTS. The Board further represents, covenants,
and agrees that while any Parity Obligations or interest thereon is Outstanding:
(a) Payment of Parity Obligations. On or before each payment date it shall make
available to the Paying Agent for such Parity Obligations or to such other party as required by
the resolution authorizing the sale of such Parity Obligations, money sufficient to pay the interest
on, principal of, and premium, if any, on the Parity Obligations as will accrue or otherwise come
due or mature, or be subject to mandatory redemption prior to maturity, on such date and the fees
and expenses related to the Parity Obligations, including the fees and expenses of the Paying
Agent and any Registrar, trustee, remarketing agent, tender agent, or Credit Provider.
(b) Performance. It will faithfully perform at all times any and all covenants,
undertakings, stipulations, and provisions contained in this Resolution, and in each and every
Parity Obligation or evidence thereof.
(c) Redemption. It will duly cause to be called for redemption prior to maturity, and
will cause to be redeemed prior to maturity, all Parity Obligations which by their terms are
mandatorily required to be redeemed prior to maturity, when and as so required.
(d) Lawful Title. It lawfully owns, has title to, or is lawfully possessed of the lands,
buildings, and facilities now constituting the University, and it will defend said title and title to
any lands, buildings, and facilities which may hereafter become part of the Financing System, for
the benefit of the owners of Parity Obligations against the claims and demands of all persons
whomsoever.
(e) Lawful Authority. It is lawfully qualified to pledge the Pledged Revenues herein
pledged in the manner prescribed herein and has lawfully exercised such right.
(f) Preservation of Lien. Subject to the conditions set forth in Sections 5, 6, and 7 of
this Resolution, it will not do any act or thing whereby the Financing System might or could be
impaired, and that it will at all times maintain, preserve, and keep the real and tangible property
of the Financing System and every part thereof in good condition, repair, and working order and
operate, maintain, preserve, and keep the facilities, buildings, structures, and equipment
pertaining thereto in good condition, repair, and working order.
(g) No Additional Encumbrance. It shall not incur additional Debt secured by the
Pledged Revenues in any manner, except as permitted by this Resolution in connection with
Parity Obligations, unless said Debt is made junior and subordinate in all respects to the liens,
pledges, covenants, and agreements of this Resolution. Notwithstanding anything to the contrary
contained herein, and in addition to the right hereunder to refund the Prior Encumbered
Obligations with Parity Obligations, the Board reserves the right to issue obligations to refund
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any Prior Encumbered Obligations and to secure the refunding obligations with the same source
or sources securing the Prior Encumbered Obligations being refunded. Upon the defeasance of
the refunded Prior Encumbered Obligations, the refunding obligations will be Prior Encumbered
Obligations (unless the refunding obligations are made Parity Obligations in accordance with the
terms of this Resolution and the resolution authorizing their issuance) under this Resolution for
all purposes.
(h) Investments and Security. It will invest and secure money in all accounts and
funds established pursuant to this Resolution in the manner prescribed by law for such funds,
including, but not by way of limitation, the Public Funds Investment Act (Chapter 2256, Texas
Government Code), Chapter 163, Texas Property Code, and Section 51.0031, Texas Education
Code, and in accordance with written policies adopted by the Board.
(i) Records. It will keep proper books of record and account in which full, true, and
correct entries will be made of all dealings, activities, and transactions relating to the University.
Each year while Parity Obligations are Outstanding, the Board will prepare from such books of
record and account an annual financial report of the University and shall furnish such report to
the Authority, to the principal municipal bond rating agencies, and to any owner of Parity
Obligations who shall request same. In addition, the Board shall submit such financial report
and other information required by law for examination in connection with financial compliance
and other audits required to be conducted by the Office of the Auditor of the State of Texas.
(j) Inspection of Books. It will permit the Authority and any owner or owners of
twenty-five percent (25%) or more of the then Outstanding Principal Amount at all reasonable
times to inspect all records, accounts, and data of the Board relating to the University and the
Financing System.
(k) Annual and Direct Obligations. In establishing the annual budget for each
Participant in the Financing System, it shall provide for the satisfaction by each Participant in the
Financing System of its Annual Obligation. The Direct Obligation shall represent the financial
responsibility of each Participant in the Financing System with respect to Outstanding Parity
Obligations. Each such Participant's Direct Obligation and Annual Obligation shall be evidenced
by a financing agreement between the Board and each Participant.
(1) Determination of Outstanding Parity Obligations. For all purposes of this
Resolution, the judgment of the chief financial officer of the University, presently the Vice
President for Finance and Administration, shall be deemed final in the determination of which
obligations of the Board constitute Parity Obligations; provided, however, such judgment is
subject to confirmation by the Auditor of the State of Texas in connection with the annual audit
of the records of the University.
(m) Execution of Credit Agreements, (i) For so long as the Authority possesses the
exclusive authority to issue bonds on behalf of the University, should the Board or the Authority
determine that it is in the best interests of the University to obtain a Credit Agreement to enhance
the security for or provide for the payment, redemption, or remarketing of Parity Obligations, the
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Authority, upon approval of the Attorney General and approval and consent of the Board, may
from time to time and at any time to execute and deliver a Credit Agreement to which the
Pledged Revenues are to be pledged. The Authority agrees that it shall use reasonable efforts to
negotiate and deliver, on behalf of the University, a Credit Agreement containing terms and
conditions mutually acceptable to the Authority and the Board; provided, however, that prior to
the Authority adopting any resolution authorizing the execution and delivery of any such Credit
Agreement, it shall receive from the University an Officer's Certificate to the effect that: (a) the
Board has determined that the Participant for whom the Credit Agreement is to be executed and
delivered possesses the financial capability to satisfy its Direct Obligation after taking into
account the payment obligations under the proposed Credit Agreement; and (b) to the best of his
or her knowledge, the Board is in compliance with all covenants contained in this Resolution and
any resolution adopted authorizing the issuance of Parity Obligations, and is not in default in the
performance and observance of any of the terms, provisions, and conditions hereof or thereof.
(ii) The Board agrees to provide promptly to the Authority substantially final versions
of all documents pertaining to any "credit agreement" (as defined in Chapter 1371, Texas
Government Code), to which the Pledged Revenues are to be pledged, proposed to be executed
and delivered by the Board to enhance the security for or provide for the payment, redemption,
or remarketing of the Prior Encumbered Obligations. The Board further agrees that it shall give
written notice to the Authority no later than thirty (30) days prior to the date the Board considers
for approval any resolution authorizing the execution and delivery of any such credit agreement.
The lien on and pledge of Pledged Revenues to pay the cost of any such credit agreement may be
on a parity with, but not superior to, the lien on and pledge of the Pledged Revenues securing the
Parity Obligations.
Section 5. ISSUANCE OF ADDITIONAL OBLIGATIONS. (a) Parity
Obligations. The Board reserves and shall have the right and power to issue or incur, or request
that the Authority, on its behalf, issue or incur, Parity Obligations for any purpose authorized by
law pursuant to the provisions of this Resolution and the applicable laws of the State of Texas
governing the issuance of bonds for the benefit of the University. The Board, or the Authority
acting on behalf of the Board, may incur, assume, guarantee, or otherwise become liable in
respect of any Parity Obligations if the Board shall have determined that it will have sufficient
funds to meet the financial obligations of each Participant (currently the University) in the
Financing System, including sufficient Pledged Revenues to satisfy the Annual Debt Service
Requirements of the Financing System and to meet all financial obligations of the Board relating
to the Financing System. In addition, the Board shall not issue or incur Parity Obligations
unless: (i) the Board shall determine that the Participant for whom the Parity Obligations are
being issued or incurred possesses the financial capability to satisfy its Direct Obligation after
taking into account the then proposed Parity Obligations; and (ii) a Designated Financial Officer
shall deliver to the Board and the Authority a certificate stating that, to the best of his or her
knowledge, the Board is in compliance with all covenants contained in this Resolution and any
resolution adopted authorizing the issuance of Parity Obligations, and is not in default in the
performance and observance of any of the terms, provisions, and conditions hereof or thereof.
(b) Non-Recourse Debt and Subordinated Debt. Non-Recourse Debt and
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Subordinated Debt may be incurred by the Board without limitation, subject to the applicable
laws of the State of Texas.
Section 6. DISPOSITION OF ASSETS ATTRIBUTABLE TO FINANCING
SYSTEM PARTICIPANTS. Except as otherwise may be required to preserve the tax exempt
status of the Bonds, the Board may convey, sell, or otherwise dispose of any properties of each
Participant (currently the University) in the Financing System provided:
(a) Ordinary Course. Such conveyance, sale, or disposition shall be in the ordinary
course of business of such Participant which uses, operates, owns, or is otherwise responsible for
such properties; or
(b) Disposition Upon Board Determination. The Board shall determine that after the
conveyance, sale, or other disposition of such properties, the Board shall have sufficient funds
during each Fiscal Year during which Parity Obligations are to be Outstanding to meet the
financial obligations of each Participant in the Financing System, including sufficient Pledged
Revenues to satisfy the Annual Debt Service Requirements of the Financing System and to meet
all financial obligations of the Board relating to the Financing System.
Section 7. COMBINATION, DIVISION, RELEASE AND ADMISSION OF
NEW INSTITUTIONS UNDER THE FINANCING SYSTEM, (a) Combination and
Division. Notwithstanding anything to the contrary contained herein, it is recognized that certain
institutions which may become Participants in the Financing System may be combined or
divided and that so long as such combined or divided institutions continue to be governed by the
Board such action shall not be in violation of the provisions of this Resolution or require any
amendments of the provisions hereof.
(b) Release. Subject to the conditions set forth below, any Participant in the
Financing System or portion thereof may be closed and abandoned by law or may be removed
from the Financing System (thus deleting the revenues, income, funds and balances attributable
to said Participant or portion thereof from Pledged Revenues) without violating the terms of this
Resolution provided:
(1) the Board approves and delivers to the Authority an Officers' Certificate to
the effect that, to the knowledge thereof, after the release of such Participant or portion
thereof, the Board will have sufficient funds during each Fiscal Year in which Parity
Obligations shall thereafter be Outstanding to meet the financial obligations of the Board,
including sufficient Pledged Revenues to satisfy the Annual Debt Service Requirements
of the Financing System and to meet all financial obligations of the Board relating to the
Financing System; and
(2) the Board and the Authority receive an Opinion of Counsel which shall
state that such release will not affect the status for federal income tax purposes of interest
on any Outstanding Parity Obligations and that all conditions precedent provided in this
Resolution or any resolution hereafter adopted governing the issuance of Parity
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Obligations relating to such release have been complied with; and
(3) (A) if the Participant or portion thereof to be released from the Financing
System is to remain under the governance and control of the Board, the Board must
either: (i) provide, from lawfully available funds, including Pledged Revenues
attributable to said withdrawing Participant, for the payment or discharge of said
Participant's Direct Obligation; or (ii) pledge to the payment of Parity Obligation,
additional resources not then pledged in an amount sufficient to satisfy such withdrawing
Participant's Direct Obligation; or
(B) if the Participant or portion thereof to be released from the Financing
System is to no longer be under the governance and control of the Board and remains in
operation independent of the Board, the Board must enter into a binding obligation with
the new governing body of the withdrawing institution or the portion thereof being
withdrawn, obligating said governing body to make payments to the Board at the times
and in the amounts equal to said Participant's Annual Obligation or to pay or discharge
said Participant's Direct Obligation, or, in the case of a portion of a Participant being
withdrawn, the proportion of the Participant's Annual Obligation or Direct Obligation, as
the case may be, attributable to the withdrawing portion of the Participant.
(c) If, after the date of the adoption of this Resolution, the Board desires for an
institution or agency governed by the Board to become a Participant of the Financing System, or
if the Board is required by law to assume the governance of an institution or agency, it may
include said institution or agency in the Financing System with the effect set forth in this
Resolution by the adoption of a resolution amending this Resolution, which resolution shall be
binding upon the Authority.
Section 8. WAIVER OF CERTAIN COVENANTS. The Board may omit in any
particular instance to comply with any covenant or condition set forth in Sections 3 through 7
hereof if before or after the time for such compliance the Holders of the same percentage in
principal amount of all Parity Obligations then Outstanding, the consent of which would be
required to amend the provisions hereof to permit such noncompliance, shall either waive such
compliance in such instance or generally waive compliance with such covenant or condition, but
no such waiver shall extend to or affect such covenant or condition except to the extent so
expressly waived and, until such waiver shall become effective, the obligations of the Board and
the duties of the Board in respect to any such covenant or condition shall remain in full force and
effect. For purposes of this Section, if a municipal bond insurance policy has been issued
insuring the payment of any Outstanding Parity Obligations, the term Holder shall mean the
company that has issued any such insurance policy or policies.
Section 9. AMOUNT, PURPOSE, AND DESIGNATION OF THE BONDS. The
"TEXAS PUBLIC FINANCE AUTHORITY STEPHEN F. AUSTIN STATE UNIVERSITY
REVENUE FINANCING SYSTEM REVENUE BONDS, SERIES 2008", are hereby
authorized to be issued and delivered in the aggregate principal amount of $20,175,000 for the
purpose of: (i) acquiring, purchasing, constructing, improving, renovating, enlarging, or
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equipping an education research facility; and (ii) paying the costs related to the issuance of the
Bonds. The sale of the Bonds shall be effected by the Authority pursuant to Section 1232.101 of
the TPFA Act and Sections 55.13(c) and 55.17, Texas Education Code. The adoption of this
resolution by the Board shall be deemed to be a request by the Board to the Authority to issue the
Bonds for the purposes stated in this Section.
Section 10. DATE, DENOMINATIONS, NUMBERS, MATURITIES AND
TERMS OF BONDS, (a) Terms of Bonds. Initially there shall be issued, sold, and delivered
hereunder fully registered bonds, without interest coupons, numbered consecutively from R-l
upward (except the initial Bonds delivered to the Attorney General of the State of Texas which
shall be numbered from T-l upward), payable to the respective initial registered owners thereof,
or to the registered assignee or assignees of said bonds or any portion or portions thereof (in each
case, the "Registered Owner"), in the denominations of $5,000 or any integral multiples of
$5,000 thereafter (an "Authorized Denomination"), maturing serially or otherwise on the dates,
in the years and in the principal amounts, respectively, and dated, all as set forth in Schedule I
attached to this Resolution. The Bonds will be sold through a competitive bid sale, the terms of
which will be approved by the Authority on the date this Resolution is adopted by the Authority.
The Designated Financial Officer is authorized to execute Schedule I attached to this Resolution
on behalf of the Board to acknowledge the sale of the Bonds.
(b) Purchaser. The sale of the Bonds to the investment banking firm or firms named
in Schedule I attached to this Resolution (the "Purchaser") at the purchase price set forth therein,
is hereby authorized, ratified and confirmed. One Bond in the principal amount maturing on
each maturity date as set forth in Schedule I attached to this Resolution shall be delivered to the
Purchaser, and the Purchaser shall have the right to exchange such Bonds as provided in Section
12 hereof without cost. The Authority does hereby officially find, determine and declare that the
Bonds were sold to the highest bidder at terms that were the most advantageous reasonably
obtained.
(c) Offering Documents. The Official Notice of Sale and the Official Bid Form,
together with any addenda thereto, prepared and circulated with respect to the sale of the Bonds,
are hereby approved.
(d) Official Statement, (i) The preliminary official statement and the use thereof in
the solicitation of offers for the purchase of the Bonds is hereby approved and the preliminary
official statement is deemed final as of its date (pursuant to the Rule).
(ii) The Authority authorizes the preliminary official statement to be:
(A) supplemented to include such additional information and amendments as may
be necessary to confirm the official statement to the terms of the Bonds and this
Resolution; and
(B) modified if, in the opinion of Bond Counsel, such modification is necessary to
satisfy the disclosure requirements of the applicable federal securities laws.
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(iii) Upon the final official statement being modified, if necessary, pursuant to clause
(ii) of this subsection (e), the final official statement, as so supplemented and modified, shall be
deemed to be approved by the Authority as the final official statement (for purposes of the Rule)
for the Bonds and an appropriate number of copies shall be delivered to the Underwriters for use
in connection with the offer and sale of the Bonds.
(f) Bond Proceeds; Deposit to Construction Fund. There is hereby created and
established a separate fund designated as the "Stephen F. Austin State University Series 2008
Bond Proceeds Construction Fund" (the "Construction Fund"). The Construction Fund shall
be held by the University with its depository bank or as otherwise directed by the University.
Within the Construction Fund there shall be established and maintained accounts designated as
the "Accrued Interest Account", the "Cost of Issuance Account" and the "Project
Account", respectively. Moneys deposited in the Construction Fund shall remain therein until
from time to time expended for the purposes described in this Resolution, and shall not be used
for any other purposes whatsoever, except as otherwise provided below, and pending such
expenditure, moneys in the Construction Fund may be invested at the direction of the Designated
Financial Officer or the designee thereof in eligible investments in accordance with the
provisions of Section 4(h) of this Resolution. Interest earnings shall accrue to the respective
accounts in which moneys are held and invested. The Authority shall cause such proceeds of the
Bonds to be deposited to the credit of the Construction Fund, in accordance with a letter of
instructions which may be executed on behalf of the Authority by its Executive Director, which
letter shall designate the fiinds to be deposited to the credit of the Accrued Interest Account, the
Cost of Issuance Account and the Project Account; provided, that only moneys representing
accrued interest and capitalized interest received from the proceeds of the Bonds shall be
deposited to the credit of the Accrued Interest Account. The University agrees that it shall pay
those costs of issuance incurred in connection with the issuance and delivery of the Bonds as are
consistent with the approval of the issuance of the Bonds by the Texas Bond Review Board and
are approved in writing by the Authority, acting through its Executive Director. The University
shall cause moneys on deposit in the Accrued Interest Account to be used to pay debt service on
the Bonds as the same shall become due and payable. The University agrees to expend the
moneys in the Project Account within the Construction Fund on costs incurred in connection
with the purposes described in Section 9 of this Resolution, consistent with the provisions of
Subchapter B, Chapter 55, Texas Education Code. Any amounts remaining in the Project
Account within the Construction Fund after the payment of all costs incurred in connection with
the purposes set out in clause (i) of Section 9 of this Resolution shall be used for the payment of
the principal of and interest on the Bonds as the same shall become due and payable. The
University shall provide to the Authority an Officer's Certificate, the form and substance of
which is described in the memorandum of understanding between the Authority and the Board
detailing the expenditure of bond proceeds. The Authority hereby finds that the deposit of the
proceeds from the sale of the Bonds in the manner outlined above is consistent with the
conditions surrounding the issuance of bonds previously issued directly by the University, and
that the procedure outlined above is adopted in accordance with Section 1232.101 of the TPFA
Act.
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(g) In General The Bonds: (i) may be assigned and transferred; (ii) may be
exchanged for other Bonds; (iii) shall have the characteristics; and (iv) shall be signed and
sealed, and the principal of and interest on the Bonds shall be payable, all as provided, and in the
manner required or indicated, in the FORM OF BONDS set forth in Exhibit B to this Resolution.
Section 11. INTEREST. The Bonds shall bear interest calculated on the basis of a
360-day year composed of twelve 30-day months from the dates specified in the FORM OF
BONDS set forth in Exhibit B to this Resolution to their respective dates of maturity or
redemption prior to maturity at the rates set forth in Schedule I attached to this Resolution.
Section 12. REGISTRATION, TRANSFER, AND EXCHANGE;
AUTHENTICATION; BOOK-ENTRY-ONLY SYSTEM, (a) Paying Agentmegistrar. Wells
Fargo Bank, National Association, is hereby appointed to act as the Paying Agent/Registrar for
the Bonds. The Designated Financial Officer is authorized to enter into and carry out a Paying
Agent/Registrar Agreement with the Paying Agent/Registrar with respect to the Bonds, a copy of
which is attached to this Resolution.
(b) Registration Books. The Board shall keep or cause to be kept at the corporate
trust office of the Paying Agent/Registrar designated in the Paying Agent/Registrar Agreement
(the "Designated Trust Office") books or records for the registration of the transfer, exchange,
and replacement of the Bonds (the "Registration Books"), and the Paying Agent/Registrar is
hereby appointed to serve as registrar and transfer agent to keep such books or records and make
such registrations of transfers, exchanges, and replacements under such reasonable regulations as
the Board and Paying Agent/Registrar may prescribe; and the Paying Agent/Registrar shall make
such registrations, transfers, exchanges, and replacements as herein provided. The Paying
Agent/Registrar shall obtain and record in the Registration Books the address of the registered
owner of each Bond to which payments with respect to the Bonds shall be mailed, as herein
provided; but it shall be the duty of each registered owner to notify the Paying Agent/Registrar in
writing of the address to which payments shall be mailed, and such interest payments shall not be
mailed unless such notice has been given. The Authority and the Board each shall have the right
to inspect the Registration Books at the Designated Trust Office of the Paying Agent/Registrar
during regular business hours, but otherwise the Paying Agent/Registrar shall keep the
Registration Books confidential and, unless otherwise required by law, shall not permit their
inspection by any other entity.
(c) Ownership of Bonds. The entity in whose name any Bond shall be registered in
the Registration Books at any time shall be deemed and treated as the absolute owner thereof for
all purposes of this Resolution, whether such Bond shall be overdue, and, to the extent permitted
by law, the Authority, the Board and the Paying Agent/Registrar shall not be affected by any
notice to the contrary; and payment of, or on account of, the principal of, premium, if any, and
interest on any such Bond shall be made only to such registered owner. All such payments shall
be valid and effective to satisfy and discharge the liability upon such Bond to the extent of the
sum or sums so paid.
(d) Payment of Bonds and Interest. The Paying Agent/Registrar shall further act as
the paying agent for paying the principal of, premium, if any, and interest on the Bonds, all as
70169362.2/10718173
14
provided in this Resolution. The Paying Agent/Registrar shall keep proper records of all
payments made by the University and the Paying Agent/Registrar with respect to the Bonds.
Notwithstanding any other provision of this Resolution to the contrary but to the extent permitted
by law, the Authority, the Board and the Paying Agent/Registrar shall be entitled to treat and
consider the person in whose name each Bond is registered in the Registration Books as the
absolute owner of such Bond for the purpose of payment of principal, premium, if any, and
interest, with respect to such Bond, for the purposes of registering transfers with respect to such
Bond, and for all other purposes of registering transfers with respect to such Bonds, and for all
other purposes whatsoever. The Paying Agent/Registrar shall pay all principal of, premium, if
any, and interest on the Bonds only to or upon the order of the respective owners, as shown in
the Registration Books as provided in this Resolution, or their respective attorneys duly
authorized in writing, and all such payments shall be valid and effective to fully satisfy and
discharge the Board's obligations with respect to payment of principal of, premium, if any, and
interest on the Bonds to the extent of the sum or sums so paid. No person other than an owner,
as shown in the Registration Books, shall receive a Bond certificate evidencing the obligation of
the Board to make payments of principal, premium, if any, and interest pursuant to this
Resolution.
(e) Authentication. On the date of initial delivery of the Bonds, the initial bonds (the
"Initial Bonds") approved by the Attorney General, and registered and manually signed by the
Comptroller of Public Accounts, will be delivered to the Representative or its designee. Upon
payment for the Initial Bonds, the Paying Agent/Registrar shall cancel the Initial Bonds and
deliver registered definitive Bonds to DTC in accordance with Section 12(h). On each substitute
Bond issued in exchange for any Bond or Bonds issued under this Resolution the Paying
Agent/Registrar shall execute the PAYING AGENT/REGISTRAR'S AUTHENTICATION
CERTIFICATE (the "Authentication Certificate"). The Authentication Certificate shall be in the
form set forth in the FORM OF BONDS.
(f) Transfer, Exchange, or Replacement. Each Bond issued and delivered pursuant
to this Resolution, to the extent of the unpaid or unredeemed principal amount thereof, may,
upon surrender of such Bond at the Designated Trust Office of the Paying Agent/Registrar,
together with a written request therefor duly executed by the registered owner or the assignee or
assignees thereof, or its or their duly authorized attorneys or representatives, with guarantee of
signatures satisfactory to the Paying Agent/Registrar, may, at the option of the registered owner
or such assignee or assignees, as appropriate, be exchanged for fully registered bonds, without
interest coupons, in the appropriate form prescribed in the FORM OF BONDS set forth in this
Resolution, in any Authorized Denomination (subject to the requirement hereinafter stated that
each substitute Bond shall be of the same series and have a single stated maturity date), as
requested in writing by such registered owner or such assignee or assignees, in an aggregate
principal amount equal to the unpaid or unredeemed principal amount of any Bond or Bonds so
surrendered, and payable to the appropriate registered owner, assignee, or assignees, as the case
may be. If a portion of any Bond shall be redeemed prior to its scheduled maturity as provided
herein, a substitute Bond or Bonds having the same series designation and maturity date, bearing
interest at the same rate, and payable in the same manner, in Authorized Denominations at the
request of the registered owner, and in an aggregate principal amount equal to the unredeemed
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portion thereof, will be issued to the registered owner upon surrender thereof for cancellation. If
any Bond or portion thereof is assigned and transferred, each Bond issued in exchange therefor
shall have the same series designation and maturity date and bear interest at the same rate and
payable in the same manner as the Bond for which it is being exchanged. Each substitute Bond
shall bear a letter and/or number to distinguish it from each other Bond. The Paying
Agent/Registrar shall exchange or replace Bonds as provided herein, and each fully registered
bond delivered in exchange for or replacement of any Bond or portion thereof as permitted or
required by any provision of this Resolution shall constitute one of the Bonds for all purposes of
this Resolution, and may again be exchanged or replaced. On each substitute Bond issued in
exchange for or replacement of any Bond or Bonds issued under this Resolution there shall be
printed an Authentication Certificate, in the form set forth in the FORM OF BONDS set forth in
Exhibit B to this Resolution. An authorized representative of the Paying Agent/Registrar shall,
before the delivery of any such Bond, date and manually sign the Authentication Certificate, and,
except as provided in subsection (e) above, no such Bond shall be deemed to be issued or
outstanding unless the Authentication Certificate is so executed. The Paying Agent/Registrar
promptly shall cancel all Bonds surrendered for transfer, exchange, or replacement. No
additional orders or resolutions need be passed or adopted by the Board or any other body or
person so as to accomplish the foregoing transfer, exchange, or replacement of any Bond or
portion thereof, and the Paying Agent/Registrar shall provide for the printing, execution, and
delivery of the substitute Bonds in typed or printed form and in the manner prescribed herein.
Pursuant to Chapter 1206, Texas Government Code, the duty of transfer, exchange, or
replacement of Bonds as aforesaid is hereby imposed upon the Paying Agent/Registrar, and,
upon the execution of the Authentication Certificate, the exchanged or replaced Bond shall be
valid, incontestable, and enforceable in the same manner and with the same effect as the Bonds
which were originally issued pursuant to this Resolution. The Board shall pay the Paying
Agent/Registrar's standard or customary fees and charges, if any, for transferring, and
exchanging any Bond or any portion thereof, but the one requesting any such transfer and
exchange shall pay any taxes or governmental charges required to be paid with respect thereto as
a condition precedent to the exercise of such privilege. The Paying Agent/Registrar shall not be
required to make any such transfer, exchange, or replacement of Bonds or any portion thereof: (i)
during the period commencing with the close of business on any Record Date and ending with
the opening of business on the next following interest payment date; or, (ii) with respect to any
Bond or portion thereof called for redemption prior to maturity, within 45 days prior to its
redemption date. To the extent possible, any new Bond issued in an exchange, replacement, or
transfer of a Bond will be delivered to the registered owner or assignee of the registered owner
not more than three business days after the receipt of the Bonds to be cancelled and the written
request as described above.
(g) Substitute Paying Agent/Registrar. The Board covenants with the registered
owners of the Bonds that at all times while the Bonds are outstanding the Board will provide a
competent and legally qualified bank, trust company, financial institution, or other agency to act
as and perform the services of Paying Agent/Registrar for the Bonds under this Resolution, and
that the Paying Agent/Registrar will be one entity. The Board reserves the right to, and may, at
its option, change the Paying Agent/Registrar upon not less than 120 days written notice to the
Paying Agent/Registrar, to be effective not later than 60 days prior to the next principal or
16
interest payment date after such notice. In the event that the entity at any time acting as Paying
Agent/Registrar (or its successor by merger, acquisition, or other method) should resign or
otherwise cease to act as such, the Board covenants that promptly it will appoint a competent and
legally qualified bank, trust company, financial institution, or other agency to act as Paying
Agent/Registrar under this Resolution. Upon any change in the Paying Agent/Registrar, the
previous Paying Agent/Registrar promptly shall transfer and deliver the Registration Books (or a
copy thereof), along with all other pertinent books and records relating to the Bonds, to the new
Paying Agent/Registrar designated and appointed by the Board. Upon any change in the Paying
Agent/Registrar, the Board promptly will cause a written notice thereof to be sent by the new
Paying Agent/Registrar to the Authority and to each registered owner of the Bonds, by United
States mail, first-class postage prepaid, which notice also shall give the address of the new
Paying Agent/Registrar. By accepting the position and performing as such, each Paying
Agent/Registrar shall be deemed to have agreed to the provisions of this Resolution, and a
certified copy of this Resolution shall be delivered to each Paying Agent/Registrar.
(h) Book-Entry-Only System. The Bonds issued in exchange for the Bonds initially
issued and delivered to the Underwriters shall be issued in the form of a separate single fully
registered Bond for each of the maturities thereof registered in the name of Cede & Co., as
nominee of DTC, and except as provided in subsection (i) hereof, all of the Outstanding Bonds
shall be registered in the name of Cede & Co., as nominee of DTC. The Authority heretofore
has executed a "DTC Blanket Letter of Representations" in connection with utilizing the DTC
Book-Entry-Only System.
With respect to Bonds registered in the name of Cede & Co., as nominee of DTC, the
Authority, the Board and the Paying Agent/Registrar shall have no responsibility or obligation to
any DTC Participant or to any person on behalf of whom such a DTC Participant holds an
interest in the Bonds. Without limiting the immediately preceding sentence, the Authority, the
Board and the Paying Agent/Registrar shall have no responsibility or obligation with respect to:
(i) the accuracy of the records of DTC, Cede & Co. or any DTC Participant with respect to any
ownership interest in the Bonds; (ii) the delivery to any DTC Participant or any other person,
other than a Bondholder, as shown on the Registration Books, of any notice with respect to the
Bonds, including any notice of redemption; or (iii) the payment to any DTC Participant or any
other person, other than a Bondholder, as shown in the Registration Books of any amount with
respect to principal of, premium, if any, or interest on the Bonds. Notwithstanding any other
provision of this Resolution to the contrary but to the extent permitted by law, the Authority, the
Board and the Paying Agent/Registrar shall be entitled to treat and consider the person in whose
name each Bond is registered in the Registration Books as the absolute owner of such Bond for
the purpose of payment of principal, premium, if any, and interest, with respect to such Bond, for
the purposes of registering transfers with respect to such Bond, and for all other purposes of
registering transfers with respect to such Bonds, and for all other purposes whatsoever. The
Paying Agent/Registrar shall pay all principal of, premium, if any, and interest on the Bonds only
to or upon the order of the respective owners, as shown in the Registration Books as provided in
this Resolution, or their respective attorneys duly authorized in writing, and all such payments
shall be valid and effective to fully satisfy and discharge the Board's obligations with respect to
payment of principal of, premium, if any, and interest on the Bonds to the extent of the sum or
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sums so paid. No person other than an owner, as shown in the Registration Books, shall receive
a Bond certificate evidencing the obligation of the Board to make payments of principal,
premium, if any, and interest pursuant to this Resolution. Upon delivery by DTC to the Paying
Agent/Registrar of written notice to the effect that DTC has determined to substitute a new
nominee in place of Cede & Co., and subject to the provisions in this Resolution with respect to
interest checks being mailed to the registered owner at the close of business on the Record Date,
the word "Cede & Co." in this Resolution shall refer to such new nominee of DTC.
(i) Successor Securities Depository; Transfers Outside Book-Entry-Only System.
In the event that the Board or the Paying Agent/Registrar determines that DTC is incapable of
discharging its responsibilities described herein and in the representation letter of the Board to
DTC (as referred in subsection (h) above) or DTC determines to discontinue providing its
services with respect to the Bonds, the Board shall: (i) appoint a successor securities depository,
qualified to act as such under Section 17(a) of the Securities and Exchange Act of 1934, as
amended, notify DTC and DTC Participants of the appointment of such successor securities
depository and transfer one or more separate Bonds to such successor securities depository; or
(ii) notify DTC and DTC Participants of the availability through DTC of Bonds and transfer one
or more separate Bonds to DTC Participants having Bonds credited to their DTC accounts. In
such event, the Bonds shall no longer be restricted to being registered in the Registration Books
in the name of Cede & Co., as nominee of DTC, but may be registered in the name of the
successor securities depository, or its nominee, or in whatever name or names Bondholders
transferring or exchanging Bonds shall designate, in accordance with the provisions of this
Resolution.
0) Payments to Cede & Co. Notwithstanding any other provision of this Resolution
to the contrary, so long as any Bond is registered in the name of Cede & Co., as nominee of
DTC, all payments with respect to principal of, premium, if any, and interest on such Bond and
all notices with respect to such Bond shall be made and given, respectively, in the manner
provided in the representation letter of the Board to DTC.
(k) Notice of Redemption. In addition to the method of providing a notice of
redemption set forth in the FORM OF BONDS, the Paying Agent/Registrar shall give notice of
redemption of Bonds at least thirty (30) days prior to a redemption date to each registered
securities depository and to any national information service that disseminates redemption
notices. In addition, in the event of a redemption caused by an advance refunding of the Bonds,
the Paying Agent/Registrar shall send a second notice of redemption to the persons specified in
the immediately preceding sentence at least thirty (30) days but not more than ninety (90) days
prior to the actual redemption date. The Paying Agent/Registrar shall also send a notice of
prepayment or redemption to the registered owner of any Bond who has not sent the Bonds in for
redemption sixty (60) days after the redemption date.
Each notice of redemption, whether required in the FORM OF BONDS or in this Section,
shall contain a description of the Bonds to be redeemed including the complete name of the
Bonds, the Series, the date of issue, the interest rate, the maturity date, the CUSIP number, a
reference to the principal amounts of each maturity called for redemption, the mailing date for
18
the notice, the date of redemption, the redemption price, the name of the Paying Agent/Registrar
and the address at which the Bonds may be redeemed, including a contact person and telephone
number.
All redemption payments made by the Paying Agent/Registrar to the registered owners of
the Bonds shall include a CUSIP number relating to each amount paid to such registered owner.
Section 13. FORM OF BONDS. The forms of the Bonds, including the form of the
Authentication Certificate, the form of Assignment, the form of any statement of insurance
provided by the municipal bond insurer in the event insurance is obtained on any of the Bonds,
and the form of Registration Certificate of the Comptroller of Public Accounts of the State of
Texas, with respect to the Bonds initially issued and delivered to the Underwriters pursuant to
this Resolution, shall be, respectively, substantially as set forth in Exhibit B. with such
appropriate variations, omissions, or insertions as are permitted or required by this Resolution.
Section 14. INDIVIDUALS NOT LIABLE. All covenants, stipulations, obligations,
and agreements of the Board contained in this Resolution shall be deemed to be covenants,
stipulations, obligations, and agreements of the Financing System and the Board to the full extent
authorized or permitted by the Constitution and laws of the State of Texas. The Authority agrees
that all covenants, stipulations, obligations, and agreements of the Board contained in this
Resolution shall apply equally to the Authority acting in its capacity as the issuer of the Bonds
on behalf of the University. No covenant, stipulation, obligation, or agreement herein contained
shall be deemed to be a covenant, stipulation, obligation, or agreement of any member of either
the Authority or the Board or agent or employee of either the Authority or the Board in the
individual capacity thereof and neither the respective members of the Authority or the Board, nor
any officer thereof or of any participant shall be liable personally on Parity Obligations when
issued, or be subject to any personal liability or accountability by reason of the issuance thereof.
Section 15. SECURITY FOR THE BONDS. The Bonds are special obligations of
the Board payable from and secured solely by the Pledged Revenues pursuant to this Resolution.
The Pledged Revenues are hereby pledged, subject to the liens securing the Prior Encumbered
Obligations, to the payment of the principal of, premium, if any, and interest on the Bonds as the
same shall become due and payable. The Board agrees to pay the principal of, premium, if any,
and the interest on the Bonds when due, whether by reason of maturity or redemption.
Section 16. PAYMENTS. Semiannually on or before each principal or interest
payment date while any of the Bonds are outstanding and unpaid, commencing on the first
interest payment date for the Bonds as provided in Schedule I attached to this Resolution, the
Board shall make available to the Paying Agent/Registrar, money sufficient to pay such interest
on and such principal of the Bonds as will accrue or mature, or be subject to mandatory
redemption prior to maturity, on such principal, redemption, or interest payment date. The
Paying Agent/Registrar shall cancel all paid Bonds and shall furnish the Board with an
appropriate certificate of cancellation.
Section 17. DAMAGED, MUTILATED, LOST, STOLEN, OR DESTROYED
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BONDS, (a) Replacement Bonds. In the event any outstanding Bond is damaged, mutilated,
lost, stolen, or destroyed, the Paying Agent/Registrar shall cause to be printed, executed, and
delivered, a new bond of the same Series, principal amount, maturity, and interest rate, and in the
same form, as the damaged, mutilated, lost, stolen, or destroyed Bond, in replacement for such
Bond in the manner hereinafter provided.
(b) Application for Replacement Bonds. Application for replacement of damaged,
mutilated, lost, stolen, or destroyed Bonds shall be made to the Paying Agent/Registrar. In every
case of loss, theft, or destruction of a Bond, the applicant for a replacement bond shall furnish to
the Authority, the Board and the Paying Agent/Registrar such security or indemnity as may be
required by them to save each of them harmless from any loss or damage with respect thereto.
Also, in every case of loss, theft, or destruction of a Bond, the applicant shall furnish to the
Authority, the Board and the Paying Agent/Registrar evidence to their satisfaction of the loss,
theft, or destruction of such Bond, as the case may be. In every case of damage or mutilation of
a Bond, the applicant shall surrender to the Paying Agent/Registrar for cancellation the Bond so
damaged or mutilated.
(c) Payment in Lieu of Replacement. Notwithstanding the foregoing provisions of
this Section, in the event any such Bond shall have matured, and no default has occurred which
is then continuing in the payment of the principal of, redemption premium, if any, or interest on
the Bond, the Board, or the Authority acting on behalf of the Board, may authorize the payment
of the same (without surrender thereof except in the case of a damaged or mutilated Bond)
instead of issuing a replacement Bond, provided security or indemnity is furnished as above
provided in this Section.
(d) Charge for Issuing Replacement Bonds. Prior to the issuance of any
replacement bond, the Paying Agent/Registrar shall charge the owner of such Bond with all
legal, printing, and other expenses in connection therewith. Every replacement bond issued
pursuant to the provisions of this Section by virtue of the fact that any Bond is lost, stolen, or
destroyed shall constitute a contractual obligation of the Board whether or not the lost, stolen, or
destroyed Bond shall be found at any time, or be enforceable by anyone, and shall be entitled to
all the benefits of this Resolution equally and proportionately with any and all other Bonds duly
issued under this Resolution.
(e) Authority for Issuing Replacement Bonds. In accordance with Chapter 1206,
Texas Government Code, this Section shall constitute authority for the issuance of any such
replacement bond without the necessity of further action by the Authority, the Board or any other
body or person, and the duty of the replacement of such Bonds is hereby authorized and imposed
upon the Paying Agent/Registrar, and the Paying Agent/Registrar shall authenticate and deliver
such Bonds in the form and manner and with the effect, as provided in Section 12(f) of this
Resolution for Bonds issued in exchange and replacement for other Bonds.
Section 18. REMEDIES. Any owner of Parity Obligations in the event of default in
connection with any covenant contained herein or in any resolution adopted hereafter authorizing
the issuance of Parity Obligations, or default in the payment of said obligations, or of any interest
20
due thereon, or other costs and expenses related thereto, may require the Authority, the Board,
their respective officials and employees, and any appropriate official of the State of Texas, to
carry out, respect, or enforce the covenants and obligations of this Resolution by all legal and
equitable means, including specifically, but without limitation, the use and filing of mandamus
proceedings in any court of competent jurisdiction against the Authority, the Board, their
respective officials and employees, or any appropriate official of the State of Texas. Any delay
or omission to exercise any right or power accruing upon any default shall not impair any such
right or power nor be construed to be a waiver of any such default or acquiescence therein, and
every such right and power may be exercised from time to time and as often as may be deemed
expedient. Acceleration of the maturities of the Bonds shall not be an available remedy.
Section 19. DEFEASANCE OF OBLIGATIONS, (a) Any Bond and the interest
thereon shall be deemed to be paid, retired and no longer Outstanding (a "Defeased Bond")
within the meaning of this Resolution, except to the extent provided in subsections (c) and (e) of
this Section, when payment of the principal of such Bond, plus interest thereon to the due date or
dates (whether such due date or dates be by reason of maturity, upon redemption, or otherwise)
either: (i) shall have been made or caused to be made in accordance with the terms thereof
(including the giving of any required notice of redemption); or (ii) shall have been provided for
on or before such due date by irrevocably depositing with or making available to the Paying
Agent/Registrar for such payment: (1) lawful money of the United States of America sufficient
to make such payment; (2) Defeasance Securities, certified by an independent public accounting
firm of national reputation to mature as to principal and interest in such amounts and at such
times as will ensure the availability, without reinvestment, of sufficient money to provide for
such payment and when proper arrangements have been made by the Authority with the Paying
Agent/Registrar for the payment of its services until all Defeased Bonds shall have become due
and payable; or (3) any combination of (1) and (2). At such time as a Bond shall be deemed to
be a Defeased Bond hereunder, as aforesaid, such Bond and the interest thereon shall no longer
be secured by, payable from, or entitled to the benefits of, the revenues herein pledged as
provided in this Resolution, and such principal and interest shall be payable solely from such
money or Defeasance Securities.
(b) The deposit under clause (ii) of subsection (a) shall be deemed a payment of a
Bond as aforesaid when proper notice of redemption of such Bonds shall have been given, in
accordance with this Resolution. Any money so deposited with the Paying Agent/Registrar as
provided in this Section may at the written discretion of the Authority also be invested in
Defeasance Securities, maturing in the amounts and at the times as hereinbefore set forth, and all
income from all Defeasance Securities in possession of the Paying Agent/Registrar pursuant to
this Section which is not required for the payment of such Bond and premium, if any, and
interest thereon with respect to which such money has been so deposited, shall be turned over to
the Authority.
(c) Notwithstanding any provision of any other Section of this Resolution which may
be contrary to the provisions of this Section, all money or Defeasance Securities set aside and
held in trust pursuant to the provisions of this Section for the payment of principal of the Bonds
and premium, if any, and interest thereon, shall be applied to and used solely for the payment of
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the particular Bonds and premium, if any, and interest thereon, with respect to which such money
or Defeasance Securities have been so set aside in trust. Until all Defeased Bonds shall have
become due and payable, the Paying Agent/Registrar shall perform the services of Paying
Agent/Registrar for such Defeased Bonds the same as if they had not been defeased, and the
Authority shall make proper arrangements to provide and pay for such services as required by
this Resolution.
(d) Notwithstanding anything elsewhere in this Resolution, if money or Defeasance
Securities have been deposited or set aside with the Paying Agent/Registrar pursuant to this
Section for the payment of Bonds and such Bonds shall not have in fact been actually paid in
full, no amendment of the provisions of this Section shall be made without the consent of the
registered owner of each Bond affected thereby.
(e) Notwithstanding the provisions of subsection (a) immediately above, to the extent
that, upon the defeasance of any Defeased Bond to be paid at its maturity, the Authority retains
the right under Texas law to later call that Defeased Bond for redemption in accordance with the
provisions of the resolution authorizing its issuance, the Authority may call such Defeased Bond
for redemption upon complying with the provisions of Texas law and upon the satisfaction of the
provisions of subsection (a) immediately above with respect to such Defeased Bond as though it
was being defeased at the time of the exercise of the option to redeem the Defeased Bond and the
effect of the redemption is taken into account in determining the sufficiency of the provisions
made for the payment of the Defeased Bond.
(f) In the event that the Authority elects to defease less than all of the principal
amount of Bonds of a maturity, the Paying Agent/Registrar shall select, or cause to be selected,
such amount of Bonds by such random method as it deems fair and appropriate.
Section 20. AMENDMENT OF RESOLUTION, (a) Amendment Without Consent.
This Resolution and the rights and obligations of the Authority, the Board and of the owners of
the Outstanding Parity Obligations may be modified or amended at any time without notice to or
the consent of any owner of the Outstanding Parity Obligations, solely for any one or more of the
following purposes:
(i) To add to the covenants and agreements of the Board or the Authority
contained in this Resolution, other covenants and agreements thereafter to be observed, or
to surrender any right or power reserved to or conferred upon the Board or the Authority
in this Resolution;
(ii) To cure any ambiguity or inconsistency, or to cure or correct any defective
provisions contained in this Resolution, upon receipt by the Board and the Authority of
an opinion of Bond Counsel, that the same is needed for such purpose, and will more
clearly express the intent of this Resolution;
(iii) To supplement the security for the Parity Obligations, including, but not
by way of limitation, to provide for the addition of new institutions and agencies to the
22
Financing System or to clarify the provisions regarding the University as a Participant in
the Financing System; provided, however, if the definition of Pledged Revenues is
amended in any manner which results in the pledge of additional resources, the terms of
such amendment may limit the amount of such additional pledge and the manner, extent,
and duration of such additional pledge all as set forth in such amendment;
(iv) To make any changes or amendments requested by any bond rating
agency then rating or requested to rate Parity Obligations, as a condition to the issuance
or maintenance of a rating, which changes or amendments do not, in the judgment of the
Board and the Authority, materially adversely affect the interests of the owners of the
Outstanding Parity Obligations;
(v) To make such changes, modifications or amendments as may be necessary
or desirable, which shall not adversely affect the interests of the owners of the
Outstanding Parity Obligations, in order, to the extent permitted by law, to facilitate the
economic and practical utilization of Credit Agreements with respect to the Parity
Obligations;
(vi) To make such other changes in the provisions hereof as the Board and the
Authority may deem necessary or desirable and which shall not, in the judgment of the
Board and the Authority, materially adversely affect the interests of the owners of
Outstanding Parity Obligations; or
(vii) To make such changes or amendments as contemplated by Section
24(c)(v) of this Resolution in order to comply with the Rule.
Notice of any such amendment may be published by the Board in the manner described in
subsection (c) of this Section; provided, however, that the publication of such notice shall not
constitute a condition precedent to the adoption of such amendatory resolution and the failure to
publish such notice shall not adversely affect the implementation of such amendment as adopted
pursuant to such amendatory resolution.
(b) Amendments With Consent. Subject to the other provisions of this Resolution,
the owners of Outstanding Parity Obligations aggregating a majority in Outstanding Principal
Amount shall have the right from time to time to approve any amendment to this Resolution,
other than amendments described in subsection (a) of this Section, which may be deemed
necessary or desirable by the Board and the Authority; provided, however, that nothing herein
contained shall permit or be construed to permit, without the approval of the owners of all of the
Outstanding Parity Obligations, the amendment of the terms and conditions in this Resolution so
as to:
(1) Grant to the owners of any Outstanding Parity Obligations a priority over the
owners of any other Outstanding Parity Obligations;
(2) Materially adversely affect the rights of the owners of less than all Parity
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Obligations then Outstanding;
(3) Change the minimum percentage of the Outstanding Principal Amount necessary
for consent to such amendment;
(4) Make any change in the maturity of the Outstanding Bonds;
(5) Reduce the rate of interest borne by Outstanding Bonds;
(6) Reduce the amount of the principal payable on Outstanding Bonds;
(7) Modify the terms of payment of principal of or interest on the Outstanding Bonds,
or impose any conditions with respect to such payment; or
(8) Adversely affect the tax exempt status of the interest on the Outstanding Bonds to
the owners thereof.
(c) Notice. If at any time this Resolution is to be amended pursuant to the provisions
of subsection (b) of this Section, the Board shall cause notice of the proposed amendment to be
published in a financial newspaper or journal of general circulation in The City of New York,
New York, once during each calendar week for at least two successive calendar weeks. Such
notice shall briefly set forth the nature of the proposed amendment and shall state that a copy
thereof is on file at the principal office of each Registrar for the Parity Obligations for inspection
by all owners of Parity Obligations. Such publication is not required, however, if the Board
gives or causes to be given such notice in writing, by certified mail, to each owner of Parity
Obligations. Such publication is not required with respect to amendments to this Resolution
effected pursuant to the provisions of subsection (a) of this Section.
(d) Receipt of Consents. Whenever at any time not less than thirty (30) days, and
within one year, from the date of the first publication of said notice or other service of written
notice of the proposed amendment the Board shall receive an instrument or instruments executed
by all of the owners or the owners of at least a majority in Outstanding Principal Amount, as
appropriate, which instrument or instruments shall refer to the proposed amendment described in
said notice and which specifically consent to and approve such amendment in substantially the
form of the copy thereof on file as aforesaid, the Board may adopt the amendatory resolution in
substantially the same form.
(e) Effect of Amendments. Upon the adoption of any resolution to amend this
Resolution pursuant to the provisions of this Section, this Resolution shall be deemed to be
amended in accordance with the amendatory resolution, and the respective rights, duties, and
obligations of the Board, the Authority and all the owners of then Outstanding Parity Obligations
and all future Parity Obligations shall thereafter be determined, exercised, and enforced under
this Resolution, as amended.
(f) Consent Irrevocable. Any consent given by any owner of Parity Obligations
24
pursuant to the provisions of this Section shall be irrevocable for a period of six months from the
date of the first publication or other service of the notice provided for in this Section, and shall
be conclusive and binding upon all future owners of the same Parity Obligations during such
period. Such consent may be revoked at any time after six months from the date of the first
publication of such notice by the owner who gave such consent, or by a successor in title, by
filing notice thereof with the Registrar for such Parity Obligations, the Authority and the Board,
but such revocation shall not be effective if the owners of a majority in Outstanding Principal
Amount, prior to the attempted revocation, consented to and approved the amendment.
(g) Ownership. For the purpose of this Section, the ownership and other matters
relating to all Parity Obligations shall be determined by the Registration Books maintained by
the Registrar.
Section 21. COVENANTS REGARDING TAX-EXEMPTION, (a) Covenants.
The Board and the Authority covenant to take any action necessary to assure, or refrain from any
action which would adversely affect, the treatment of the Bonds as obligations described in
section 103 of the Code, the interest on which is not includable in the "gross income" of the
holder for purposes of federal income taxation. The Authority understands, and the Board
agrees, that all costs associated with satisfying the below covenants including, but not by way of
limitation, the costs incurred in respect to compliance with clause (8) below, shall be borne by
the Board. In furtherance thereof, the Board and the Authority covenant as follows:
(1) to take any action to assure that no more than 10 percent of the proceeds
of the Bonds or the projects financed therewith (less amounts deposited to a reserve fund,
if any) are used for any "private business use," as defined in section 141(b)(6) of the
Code or, if more than 10 percent of the proceeds or the projects financed therewith are so
used, such amounts, whether or not received by the Board, with respect to such private
business use, do not, under the terms of this Resolution or any underlying arrangement,
directly or indirectly, secure or provide for the payment of more than 10 percent of the
debt service on the Bonds, in contravention of section 141(b)(2) of the Code;
(2) to take any action to assure that in the event that the "private business use"
described in subsection (1) hereof exceeds 5 percent of the proceeds of the Bonds or the
projects financed therewith (less amounts deposited into a reserve fund, if any) then the
amount in excess of 5 percent is used for a "private business use" which is "related" and
not "disproportionate," within the meaning of section 141(b)(3) of the Code, to the
governmental use;
(3) to take any action to assure that no amount which is greater than the lesser
of $5,000,000, or 5 percent of the proceeds of the Bonds (less amounts deposited into a
reserve fund, if any) is directly or indirectly used to finance loans to persons, other than
state or local governmental units, in contravention of section 141(c) of the Code;
(4) to refrain from taking any action which would otherwise result in the
Bonds being treated as "private activity bonds" within the meaning of section 141 (b) of
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the Code;
(5) to refrain from taking any action that would result in the Bonds being
"federally guaranteed" within the meaning of section 149(b) of the Code;
(6) to refrain from using any portion of the proceeds of the Bonds, directly or
indirectly, to acquire or to replace funds which were used, directly or indirectly, to
acquire investment property (as defined in section 148(b)(2) of the Code) which produces
a materially higher yield over the term of the Bonds, other than investment property
acquired with -
(A) proceeds of the Bonds invested for a reasonable temporary
period of 3 years or less or, in the case of a refunding bond, for a period of 30
days or less until such proceeds are needed for the purpose for which the Bonds
are issued,
(B) amounts invested in a bona fide debt service fund, within
the meaning of section 1.148-1 (b) of the Treasury Regulations, and
(C) amounts deposited in any reasonably required reserve or
replacement fund to the extent such amounts do not exceed 10 percent of the
proceeds of the Bonds;
(7) to otherwise restrict the use of the proceeds of the Bonds or amounts
treated as proceeds of the Bonds, as may be necessary, so that the Bonds do not otherwise
contravene the requirements of section 148 of the Code (relating to arbitrage) and, to the
extent applicable, section 149(d) of the Code (relating to advance refundings); and
(8) to pay to the United States of America at least once during each five-year
period (beginning on the date of delivery of the Bonds) an amount that is at least equal to
90 percent of the "Excess Earnings," within the meaning of section 148(f) of the Code
and to pay to the United States of America, not later than 60 days after the Bonds have
been paid in full, 100 percent of the amount then required to be paid as a result of Excess
Earnings under section 148(f) of the Code.
(b) Rebate Fund. In order to facilitate compliance with the above covenant (8), a
"Rebate Fund" is hereby established by the Board for the sole benefit of the United States of
America, and such fund shall not be subject to the claim of any other person, including without
limitation the registered owners of the Bonds. The Rebate Fund is established for the additional
purpose of compliance with section 148 of the Code. The Rebate Fund shall be maintained and
administered at the direction of the Board.
(c) Proceeds. The Board understands that the term "proceeds" includes "disposition
proceeds" as defined in the Treasury Regulations and, in the case of refunding bonds, transferred
proceeds (if any) and proceeds of the refunded bonds expended prior to the date of issuance of
26
the Bonds. It is the understanding of the Board that the covenants contained herein are intended
to assure compliance with the Code and any regulations or rulings promulgated by the U.S.
Department of the Treasury pursuant thereto. In the event that regulations or rulings are
hereafter promulgated which modify or expand provisions of the Code, as applicable to the
Bonds, the Board will not be required to comply with any covenant contained herein to the
extent that such failure to comply, in the opinion of nationally recognized bond counsel, will not
adversely affect the exemption from federal income taxation of interest on the Bonds under
section 103 of the Code. In the event that regulations or rulings are hereafter promulgated which
impose additional requirements which are applicable to the Bonds, the Board agrees to comply
with the additional requirements to the extent necessary, in the opinion of nationally recognized
bond counsel, to preserve the exemption from federal income taxation of interest on the Bonds
under section 103 of the Code. In furtherance of the foregoing, the Chair of the Board, the Chair
of the Authority, the Executive Director of the Authority, and the Designated Financial Officer
each may execute any documents, certificates or reports required by the Code and to make such
elections, on behalf of the Board, which may be permitted by the Code as are consistent with the
purpose for the issuance of the Bonds.
(d) Allocation Of, and Limitation On, Expenditures for the Project. The Board
covenants to account for on its books and records the expenditure of proceeds from the sale of
the Bonds and any investment earnings thereon to be used for the purposes described in Section
9 of this Resolution (the "Project") in accordance with the requirements of the Code. The Board
recognizes that in order for the proceeds to be considered used for the reimbursement of costs,
the proceeds must be allocated to expenditures within 18 months of the later of the date that: (1)
the expenditure on a Project is made; or (2) each such Project is completed; but in no event later
than three years after the date on which the original expenditure is paid. The foregoing
notwithstanding, the Board recognizes that in order for proceeds to be expended under the Code,
the sale proceeds or investment earnings must be expended no more than 60 days after the earlier
of: (1) the fifth anniversary of the date of delivery of the Bonds; or (2) the date the Bonds are
retired. The Board agrees to obtain the advise of nationally-recognized bond counsel if such
expenditure fails to comply with the foregoing to assure that such expenditure will not adversely
affect the tax-exempt status of the Bonds. For purposes of this subsection, the Board shall not be
obligated to comply with this covenant if it obtains an opinion of nationally-recognized bond
counsel to the effect that such failure to comply will not adversely affect the excludability for
federal income tax purposes from gross income of the interest. The Board shall notify the
Authority in writing promptly after it receives or is made aware of any such opinion.
(e) Disposition of Project. The Board covenants that the property constituting a
Project will not be sold or otherwise disposed in a transaction resulting in the receipt by the
Board of cash or other compensation, unless the Board obtains an opinion of nationally-recognized
bond counsel substantially to the effect that such sale or other disposition will not
adversely affect the tax-exempt status of the Bonds. For purposes of this subsection, the Board
shall not be obligated to comply with this covenant if it obtains an opinion of nationally-recognized
bond counsel to the effect that such failure to comply will not adversely affect the
excludability for federal income tax purposes from gross income of the interest. The Board shall
notify the Authority in writing promptly after it receives or is made aware of any such opinion.
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Section 22. PRIOR REDEMPTION. Optional Redemption. The Bonds shall be
subject to redemption prior to maturity, at the option of the Authority, on the dates and terms
specified in Schedule I attached to this Resolution, in whole or in part (but if less than all the
Bonds of a single maturity are called for redemption, those bonds called shall be selected by lot
or other customary random method by the Paying Agent/Registrar), for a redemption price equal
to the principal amount to be redeemed plus accrued interest to the date fixed for redemption.
Section 23. OTHER REPRESENTATION AND COVENANTS. The Authority
and the Board further covenant or warrant as follows:
(a) The Authority is a duly organized and existing political subdivision of the State of
Texas under the Constitution and laws of the State of Texas.
(b) The Authority is duly authorized under the laws of the State of Texas to issue the
Bonds; all action on its part of the creation and issuance of the Bonds has been duly and
effectively taken; and the Bonds in the hands of the Holders thereof are and will be valid and
enforceable obligations of the Authority in accordance with their terms.
(c) The Bonds upon issuance and approval by the Attorney General of the State of
Texas will be legal, valid and binding obligations of the Authority, subject to bankruptcy,
insolvency, or other laws affecting creditors; rights generally and as may be affected by matters
involving the exercise of equitable or judicial discretion.
(d) The Bonds and Bond documents do not conflict with other agreements or
obligations binding on the University.
(e) No litigation is pending that would adversely affect the financial condition of the
Authority, and no litigation of any nature has been filed or is now pending to restrain or enjoin
the issuance or delivery of the Bonds, that would affect the provisions made for the payment or
security of the Bonds, or that in any manner questions the proceedings or authority concerning
the issuance of the Bonds.
(f) There has been no default or non-appropriation of any obligations of the
Authority.
Section 24. CONTINUING DISCLOSURE, (a) Annual Reports, (i) The Board
shall provide annually to each NRMSIR and any SID, within six months after the end of each
fiscal year ending in or after 2008, financial information and operating data of the general type
included in the final Official Statement authorized by Section 10 hereof, being the information
described in Exhibit C hereto. Any financial statements so to be provided shall be prepared in
accordance with the accounting principles described in Exhibit C hereto, or such other
accounting principles as the Board may be required to employ from time to time pursuant to state
law or regulation. If the Board commissions an audit of such statements and the audit is
completed within the period during which they must be provided, a copy of such audit also shall
28
be provided in accordance with the Rule. If any such audit commissioned by the Board of such
financial statements is not complete within such period, then the Board shall provide unaudited
financial statements and audited financial statements for the applicable fiscal year to each
NRMSIR and any SID, when and if the audit report on such statements become available.
(ii) If the Board changes the fiscal year of the University, it will notify each NRMSIR
and any SID of the change (and of the date of the new fiscal year end) prior to the next date by
which the Board otherwise would be required to provide financial information and operating data
pursuant to this Section. The financial information and operating data to be provided pursuant to
this Section may be set forth in full in one or more documents or may be included by specific
reference to any document (including an official statement or other offering document, if it is
available from the MSRB) that theretofore has been provided to each NRMSIR and any SID or
filed with the SEC.
(b) Material Event Notices. The Board shall notify any SID and either each NRMSIR or
the MSRB, in a timely manner, of any of the following events with respect to the Bonds, if such
event is material within the meaning of the federal securities laws:
1. Principal and interest payment delinquencies;
2. Non-payment related defaults;
3. Unscheduled draws on debt service reserves reflecting financial difficulties;
4. Unscheduled draws on credit enhancements reflecting financial difficulties;
5. Substitution of credit or liquidity providers, or their failure to perform;
6. Adverse tax opinions or events affecting the tax-exempt status of the Bonds;
7. Modifications to rights of holders of the Bonds;
8. Bond calls;
9. Defeasances;
10. Release, substitution, or sale of property securing repayment of the Bonds; and
11. Rating changes.
The Board shall notify any SID and either each NRMSIR or the MSRB, in a timely manner, of
any failure by the Board to provide financial information or operating data in accordance with
subsection (a) of this Section by the time required by such subsection.
(c) Limitations, Disclaimers, and Amendments, (i) The Board shall be obligated to
observe and perform the covenants specified in this Section for so long as, but only for so long
as, the Board remains an "obligated person" with respect to the Bonds within the meaning of the
Rule, except that the Board in any event will give notice of any deposit made in accordance with
this Resolution or applicable law that causes the Bonds no longer to be Outstanding.
(ii) The provisions of this Section are for the sole benefit of the registered owners and
beneficial owners of the Bonds, and nothing in this Section, express or implied, shall give any
benefit or any legal or equitable right, remedy, or claim hereunder to any other person. The
Board undertakes to provide only the financial information, operating data, financial statements,
and notices which it has expressly agreed to provide pursuant to this Section and does not hereby
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undertake to provide any other information that may be relevant or material to a complete
presentation of the Board's financial results, condition, or prospects or hereby undertake to
update any information provided in accordance with this Section or otherwise, except as
expressly provided herein. The Board does not make any representation or warranty concerning
such information or its usefulness to a decision to invest in or sell Bonds at any future date.
(iii) UNDER NO CIRCUMSTANCES SHALL THE BOARD BE LIABLE TO THE
REGISTERED OWNER OR BENEFICIAL OWNER OF ANY BOND OR ANY OTHER
PERSON, IN CONTRACT OR TORT, FOR DAMAGES RESULTING IN WHOLE OR IN
PART FROM ANY BREACH BY THE BOARD WHETHER NEGLIGENT OR WITHOUT
FAULT ON ITS PART, OF ANY COVENANT SPECIFIED IN THIS SECTION, BUT EVERY
RIGHT AND REMEDY OF ANY SUCH PERSON, IN CONTRACT OR TORT, FOR OR ON
ACCOUNT OF ANY SUCH BREACH SHALL BE LIMITED TO AN ACTION FOR
MANDAMUS OR SPECIFIC PERFORMANCE.
(iv) No default by the Board in observing or performing its obligations under this
Section shall comprise a breach of or default under the Resolution for purposes of any other
provision of this Resolution. Nothing in this Section is intended or shall act to disclaim, waive,
or otherwise limit the duties of the Board under federal and state securities laws.
(v) The provisions of this Section may be amended by the Board from time to time to
adapt to changed circumstances that arise from a change in legal requirements, a change in law,
or a change in the identity, nature, status, or type of operations of the Board, but only if: (1) the
provisions of this Section, as so amended, would have permitted an underwriter to purchase or
sell Bonds in the primary offering of the Bonds in compliance with the Rule, taking into account
any amendments or interpretations of the Rule since such offering as well as such changed
circumstances and; (2) either: (A) the registered owners of a majority in aggregate principal
amount (or any greater amount required by any other provision of this Resolution that authorizes
such an amendment) of the Outstanding Bonds consent to such amendment; or (B) a person that
is unaffiliated with the Board (such as nationally recognized bond counsel) determined that such
amendment will not materially impair the interest of the registered owners and beneficial owners
of the Bonds. If the Board so amends the provisions of this Section, it shall include with any
amended financial information or operating data next provided in accordance with subsection (a)
of this Section an explanation, in narrative form, of the reason for the amendment and of the
impact of any change in the type of financial information or operating data so provided. The
Board may also amend or repeal the provisions of this continuing disclosure agreement if the
SEC amends or repeals the applicable provision of the Rule or a court of final jurisdiction enters
judgment that such provisions of the Rule are invalid, but only if and to the extent that the
provisions of this sentence would not prevent an underwriter from lawfully purchasing or selling
Bonds in the primary offering of the Bonds.
Section 25. RESOLUTION TO CONSTITUTE A CONTRACT; EQUAL
SECURITY. In consideration of the acceptance of the Bonds, the issuance of which is
authorized hereunder, by those who shall hold the same from time to time, this Resolution shall
be deemed to be and shall constitute a contract between the Authority, the Board and the Holders
30
from time to time of the Bonds and the pledge made in this Resolution by the Board and the
covenants and agreements set forth in this Resolution to be performed by the Authority and the
Board shall be for the equal and proportionate benefit, security, and protection of all Holders,
without preference, priority, or distinction as to security or otherwise of any of the Bonds
authorized hereunder over any of the others by reason of time of issuance, sale, or maturity
thereof or otherwise for any cause whatsoever, except as expressly provided in or permitted by
this Resolution.
Section 26. SEVERABILITY OF INVALID PROVISIONS. If any one or more of
the covenants, agreements, or provisions herein contained shall be held contrary to any express
provisions of law or contrary to the policy of express law, though not expressly prohibited, or
against public policy, or shall for any reason whatsoever be held invalid, then such covenants,
agreements, or provisions shall be null and void and shall be deemed separable from the
remaining covenants, agreements, or provisions and shall in no way affect the validity of any of
the other provisions hereof or of the Bonds issued hereunder.
Section 27. PAYMENT AND PERFORMANCE ON BUSINESS DAYS. Except
as provided to the contrary in the FORM OF BONDS, whenever under the terms of this
Resolution or the Bonds, the performance date of any provision hereof or thereof, including the
payment of principal of or interest on the Bonds, shall occur on a day other than a Business Day,
then the performance thereof, including the payment of principal of and interest on the Bonds,
need not be made on such day but may be performed or paid, as the case may be, on the next
succeeding Business Day with the same force and effect as if made on the date of performance or
payment.
Section 28. LIMITATION OF BENEFITS WITH RESPECT TO THE
RESOLUTION. With the exception of the rights or benefits herein expressly conferred,
nothing expressed or contained herein or implied from the provisions of this Resolution or the
Bonds is intended or should be construed to confer upon or give to any person other than the
Authority, the Board, the Holders, and the Paying Agent/Registrar, any legal or equitable right,
remedy, or claim under or by reason of or in respect to this Resolution or any covenant,
condition, stipulation, promise, agreement, or provision herein contained. This Resolution and
all of the covenants, conditions, stipulations, promises, agreements, and provisions hereof are
intended to be and shall be for and inure to the sole and exclusive benefit of the Authority, the
Board, the Holders, and the Paying Agent/Registrar as herein and therein provided.
Section 29. CUSTODY, APPROVAL, BOND COUNSEL'S OPINION, CUSIP
NUMBERS, PREAMBLE AND INSURANCE. The Executive Director of the Authority is
hereby authorized to have control of the Bonds issued hereunder and all necessary records and
proceedings pertaining to the Bonds pending their delivery and approval by the Attorney General
of the State of Texas. The Executive Director of the Authority is hereby authorized, to the extent
deemed necessary or advisable thereby, in the discretion thereof, to request that the Attorney
General approve the Bonds as permitted by Chapter 1202, in which case the Executive Director
of the Authority also is authorized to request the Comptroller of Public Accounts register the
Bonds, and to cause an appropriate legend reflecting such approval and registration to appear on
31
70169362.2/10718173
the Bonds and the substitute Bonds. The approving legal opinion of Bond Counsel and the
assigned CUSIP numbers may be printed on the Bonds and on any Bonds issued and delivered in
exchange or replacement of any Bond, but the presence or absence thereof shall not affect the
legality or enforceability of the Bonds, and shall be solely for the convenience and information
of the registered owners of the Bonds. The preamble to this Resolution is hereby adopted and
made a part of this Resolution for all purposes. If insurance is obtained on any of the Bonds, the
Bonds shall bear, as appropriate and applicable, a legend concerning insurance as provided by
the municipal bond insurance company issuing any such insurance.
Section 30. FURTHER PROCEDURES. The Chair of the Board, the Chair of the
Authority, the Executive Director of the Authority, the Designated Financial Officer, and all
other officers, employees, and agents of the Authority and the University, and each of them, shall
be and they are hereby expressly authorized, empowered, and directed from time to time and at
any time to do and perform all such acts and things and to execute, acknowledge, and deliver in
the name and under the corporate seal and on behalf of the Authority or the Board, as
appropriate, all such instruments, whether or not herein mentioned, as may be necessary or
desirable in order to carry out the terms and provisions of this Resolution, the Bonds, the sale
and delivery of the Bonds and fixing all details in connection therewith, and to approve any
Official Statement, or supplements thereto, in connection with the Bonds. The Designated
Financial Officer specifically is authorized to execute Schedule I attached to this Resolution for
the purposes described in Section 10(a) of this Resolution.
Section 31. REPEAL OF CONFLICTING RESOLUTIONS. All resolutions and
all parts of any resolutions which are in conflict or inconsistent with this Resolution are hereby
repealed and shall be of no further force or effect to the extent of such conflict or inconsistency.
Section 32. REFERENCES TO AUTHORITY. By operation of Texas law
including, but not by way of limitation, the TPFA Act and the Texas Education Code being
amended by the Texas legislature, should the Authority no longer be charged with the duty and
exclusive authority to act on behalf of the University in issuing bonds on its behalf, all references
to the Authority in this Resolution shall be null and void and of no effect. Furthermore, should
the Authority no longer be charged with the duty and exclusive authority to act on behalf of the
University in issuing bonds on its behalf, the Authority shall be deemed to have discharged all of
its duties and responsibilities to the University under this Resolution, and all such duties and
responsibilities shall be assumed by the University.
Section 33. PERFECTION OF PLEDGE. Chapter 1208, Government Code, applies
to the issuance of the Bonds and the pledge of the Pledged Revenues granted under Section 2 of
this Resolution, and such pledge is therefore valid, effective and perfected. If Texas law is
amended at any time while the Bonds are outstanding and unpaid such that the pledge of the
Pledged Revenues under Section 2 of this Resolution is to be subject to the filing requirements of
Chapter 9, Business & Commerce Code, then in order to preserve to the registered owners of the
Bonds the perfection of the security interest in said pledge, the Authority agrees to take such
measures as it determines are reasonable and necessary under Texas law to comply with the
applicable provisions of Chapter 9, Business & Commerce Code and enable a filing to perfect
32
the security interest in said pledge to occur.
Section 34. BOND INSURANCE. In the event the Bonds are qualified for municipal
bond insurance and the winning bidder for the Bonds wishes to purchase such municipal bond
insurance for the benefit of the holders of the Bonds, the cost thereof will be paid by the winning
bidder. The municipal bond insurer shall be deemed to be the sole holder of the Bonds insured
by it for the purpose of exercising any voting right or privilege or giving any consent or direction
or taking any other action that the holders of the Bonds insured by it are entitled to take pursuant
to Sections 18 and 20 of this Resolution. The Authority and the Board shall comply with the
provisions contained in the Commitment For Municipal Bond Insurance issued by
(and as set forth in Exhibit D hereto) as if such provisions were
set forth in this Resolution.
Section 35. PUBLIC NOTICE. It is hereby found and determined that each of the
officers and members of the Authority and the Board was duly and sufficiently notified officially
and personally, in advance, of the time, place, and purpose of their respective meetings at which
this Resolution was adopted, and that this Resolution would be introduced and considered for
adoption at said meetings; and that said meetings were open to the public, and public notice of
the time, place, and purpose of said meetings was given, all as required by Chapter 551, Texas
Government Code. In addition, the meeting of the Board was held as a telephone conference call
pursuant to Section 551.121, Texas Government Code, and that it was necessary to convene said
meeting immediately to finalize the terms and conditions relating to the sale of the Bonds at a
time when it was found to be difficult, and possibly impossible, to convene a quorum of the
Board in one location.
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70169362.2/10718173
SCHEDULE I
$
Texas Public Finance Authority Stephen F. Austin State University
Revenue Financing System Revenue Bonds, Series 2008
Date of Bonds: March 4, 2008
Purchaser:
Price: $
Insurance:
Serial Bonds
Principal Maturity Interest
Amount April 15 Rate
2008
Interest on the Bonds will accrue from the date of the delivery to the Purchaser, and is
payable on April 15, 2008 and semiannually thereafter on October 15 and April 15 of each year
until maturity or prior redemption.
The Bonds maturing on and after October 15, 2018 may be redeemed prior to their
scheduled maturities, by the Authority at the option and direction of the University, on October
15, 2017, or on any date thereafter, at a redemption price equal to the principal amount to be
redeemed plus accrued interest from the most recent interest payment date to the date fixed for
redemption.
(Signature Page Follows)
70169362.2
APPROVED:
By:
Name Danny R. Gallant
Title: Interim Vice President for Finance
and Administration
70169362.2
EXHIBIT A
DEFINITIONS
As used in this Resolution the following terms and expressions shall have the meanings
set forth below, unless the text hereof specifically indicates otherwise:
"Annual Debt Service Requirements" means, for any Fiscal Year, the principal of and
interest on all Parity Obligations coming due at Maturity or Stated Maturity (or that could come
due on demand of the owner thereof other than by acceleration or other demand conditioned
upon default by the Board on such Debt, or be payable in respect of any required purchase of
such Debt by the Board) in such Fiscal Year, and, for such purposes, any one or more of the
following rules shall apply at the election of the Board:
(1) Committed Take Out. If the Board, or the Authority on behalf of the Board,
has entered into a Credit Agreement constituting a binding commitment within normal
commercial practice to discharge any of its Funded Debt at its Stated Maturity (or, if due
on demand, at any date on which demand may be made) or to purchase any of its Funded
Debt at any date on which such Debt is subject to required purchase, all under
arrangements whereby the obligation to repay the amounts advanced for such discharge
or purchase constitutes Funded Debt, then the portion of the Funded Debt committed to
be discharged or purchased shall be excluded from such calculation and the principal of
and interest on the Funded Debt incurred for such discharging or purchase that would be
due in the Fiscal Year for which the calculation is being made, if incurred at the Stated
Maturity or purchase date of the Funded Debt to be discharged or purchased, shall be
added;
(2) Balloon Debt. If the principal (including the accretion of interest resulting
from original issue discount or compounding of interest) of any series or issue of Funded
Debt due (or payable in respect of any required purchase of such Funded Debt by the
Board) in any Fiscal Year either is equal to at least 25% of the total principal (including
the accretion of interest resulting from original issue discount or compounding of
interest) of such Funded Debt or exceeds by more than 50% the greatest amount of
principal of such series or issue of Funded Debt due in any preceding or succeeding
Fiscal Year (such principal due in such Fiscal Year for such series or issue of Funded
Debt being referred to herein as "Balloon Debt"), the amount of principal of such Balloon
Debt taken into account during any Fiscal Year shall be equal to the debt service
calculated using the original principal amount of such Balloon Debt amortized over the
Term of Issue on a level debt service basis at an assumed interest rate equal to the rate
borne by such Balloon Debt on the date of calculation;
(3) Consent Sinking Fund. In the case of Balloon Debt (as defined in clause (2)
above), if a Designated Financial Officer shall deliver to the Board and the Authority an
Officer's Certificate providing for the retirement of (and the instrument creating such
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70169362.2
Balloon Debt shall permit the retirement of), or for the accumulation of a sinking fund for
(and the instrument creating such Balloon Debt shall permit the accumulation of a
sinking fund for), such Balloon Debt according to a fixed schedule stated in such
Officer's Certificate ending on or before the Fiscal Year in which such principal (and
premium, if any) is due, then the principal of (and, in the case of retirement, or to the
extent provided for by the sinking fund accumulation, the premium, if any, and interest
and other debt service charges on) such Balloon Debt shall be computed as if the same
were due in accordance with such schedule, provided that this clause (3) shall apply only
to Balloon Debt for which the installments previously scheduled have been paid or
deposited to the sinking fund established with respect to such Debt on or before the times
required by such schedule; and provided further that this clause (3) shall not apply where
the Board has elected to apply the rule set forth in clause (2) above;
(4) Prepaid Debt. Principal of and interest on Parity Obligations, or portions
thereof, shall not be included in the computation of the Annual Debt Service
Requirements for any Fiscal Year for which such principal or interest are payable from
funds on deposit or set aside in trust for the payment thereof at the time of such
calculations (including without limitation capitalized interest and accrued interest so
deposited or set aside in trust) with a financial institution acting as fiduciary with respect
to the payment of such Debt;
(5) Variable Rate. As to any Parity Obligation that bears interest at a variable
interest rate which cannot be ascertained at the time of calculation of the Annual Debt
Service Requirement then, at the option of the Board, either: (1) an interest rate equal to
the average rate borne by such Parity Obligations (or by comparable debt in the event that
such Parity Obligations has not been outstanding during the preceding 24 months) for any
24 month period ending within 30 days prior to the date of calculation; or (2) an interest
rate equal to the 30-year Tax-Exempt Revenue Bond Index (as most recently published in
The Bond Buyer), shall be presumed to apply for all future dates, unless such index is no
longer published in The Bond Buyer, in which case an index of tax-exempt revenue
bonds with maturities of at least 20 years which is published in a newspaper or journal
with national circulation may be used for this purpose. If two Series of Parity
Obligations which bear interest at variable interest rates, or one or more maturities within
a Series, of equal par amounts, are issued simultaneously with inverse floating interest
rates providing a composite fixed interest rate for such Parity Obligations taken as a
whole, such composite fixed rate shall be used in determining the Annual Debt Service
Requirement with respect to such Parity Obligations;
(6) Guarantee. In the case of any guarantee, as described in clause (2) of the
definition of Debt, no obligation will be counted if the Board does not anticipate in its
annual budget that it will make any payments on the guarantee. If, however, the Board is
making payments on a guarantee or anticipates doing so in its annual budget, such
obligation shall be treated as Parity Obligations and calculations of Annual Debt Service
Requirements with respect to such guarantee shall be made assuming that the Board will
A-2
make all additional payments due under the guaranteed obligation. If the entity whose
obligation is guaranteed cures all defaults and the Board no longer anticipates making
payments under the guarantee, the guaranteed obligations shall not be included in the
calculation of Annual Debt Service Requirements;
(7) Commercial Paper. With respect to any Parity Obligations issued in the form
of commercial paper with maturities not exceeding 270 days, the interest on such Parity
Obligations shall be calculated in the manner provid